SQE Law of agency, contract and negligence question: Salesperson Alan Ho signs a provisional agreement

EAA SQELaw of agency, contract and negligence

Salesperson Alan Ho signs a provisional agreement 'as agent for the vendor, Mr Chu', honestly believing that Mr Chu's nephew could authorise the sale. Mr Chu never authorised it and refuses to ratify. The buyer, Ms Lee, loses a good bargain. Against whom does Ms Lee have a claim, and on what basis?

A Against Mr Chu, who is bound by the agreement because it was signed in his name
B Against no one, because Alan honestly believed that he had authority to sign it
C Against Alan, for breach of his implied warranty of authority to act for Mr Chu
D Against Mr Chu's nephew only, who is treated in law as the vendor of the flat

Show the answer and explanation

Answer: C. Against Alan, for breach of his implied warranty of authority to act for Mr Chu

Answer: Against Alan, for breach of warranty of authority. Why not the others: - Against Mr Chu: A principal is not bound by an act he never authorised, did not represent as authorised, and refuses to ratify. - Against no one: Liability for breach of warranty of authority is strict; honest belief is no defence. - Against the nephew as vendor: The nephew is not the owner and is not a party to the agreement. Rule: A person who acts as agent impliedly warrants to the third party that he has the principal's authority. If he has none and the principal does not ratify, the third party can sue the agent for the loss, even if the agent acted honestly. Source: Syllabus 3.5.7 (breach of contractual duties by agents and liabilities); as at Oct 2026

Common mistake

Thinking an agent who honestly but wrongly claims authority escapes liability.

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Related SQE questions

Which of the following statements about ratification of an unauthorised act are correct?Mr Wong Kar-fai lives in Vancouver. He wants his sister, Ms Wong Mei-ling, to sign the assignment of his flat at Flat 9C, Pine Court, Tsuen Wan on his behalf at completion. How should he appoint her?Mr Siu agreed to buy a flat from Mrs Lai for HK$5,000,000 and paid a deposit of HK$500,000. Mrs Lai refuses to complete, and Mr Siu chooses to claim damages rather than specific performance. On the completion date, the flat was worth HK$5,600,000. He gets his deposit back. Assume no other loss. What damages for loss of bargain can he claim?

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An original question written to the published SQE syllabus. Figures in the explanation carry their effective dates; check them against the current law before relying on them. Independent exam practice. Not affiliated with or endorsed by the Estate Agents Authority (EAA) or the examination administrator.

SQE Law of agency, contract and negligence question: Salesperson Alan Ho signs a provisional agreement

EAA SQELaw of agency, contract and negligence

A Against Mr Chu, who is bound by the agreement because it was signed in his name
B Against no one, because Alan honestly believed that he had authority to sign it
C Against Alan, for breach of his implied warranty of authority to act for Mr Chu
D Against Mr Chu's nephew only, who is treated in law as the vendor of the flat

Show the answer and explanation

Answer: C. Against Alan, for breach of his implied warranty of authority to act for Mr Chu

Common mistake

Thinking an agent who honestly but wrongly claims authority escapes liability.

Practise more SQE Law of agency, contract and negligence questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Build a daily practice habit : a few exam-style questions a day, with worked answers. Free to start.

Start practising →