authority to do what is customary, even though he may in fact have been expressly forbidden so to do by his principal. But this rule is subject to the proviso that if the third party have notice of the factor’s actual instructions, the “apparent” authority will not be greater than the actual. “The general principle of law,” said Lord Blackburn in the case of Cole v. North-Western Bank, 1875, L.R. 10, C.P. 363, “is that when the true owner has clothed any one with apparent authority to act as his agent, he is bound to those who deal with the agent on the assumption that he really is an agent with that authority, to the same extent as if the apparent authority were real.” Under such circumstances the principal is for reasons of common fairness precluded, or, in legal phraseology, estopped, from denying his agent’s authority. On the same principle of estoppel, but not by reason of any trade usages, a course of dealing which has been followed between a factor and a third party with the assent of the principal will give the factor apparent authority to continue dealing on the same terms even after the principal’s assent has been withdrawn; provided that the third party has no notice of the withdrawal.
Such apparent authority binds the principal both as to acts done in excess of the actual authority and also when the actual authority has entirely ceased. For instance, A. B. receives goods from C.D. with instructions not to sell below 1s. per ℔; A. B. sells at 1012d., the market price; the buyer is entitled to the goods at 1012d., because A. B. had apparent authority, although he exceeded his actual authority. On the same principle the buyer would get a good title by buying from A. B. goods entrusted to him by C. D., even though at the time of the sale C. D. had revoked A. B.’s authority and instructed him not to sell at all. In either case the factor is held out as having authority to sell, and the principal cannot afterwards turn round and say that his factor had no such authority. As in the course of his business the factor must necessarily make representations preliminary to the contracts into which he enters, so the principal will be bound by any such representations as may be within the factor’s actual or apparent authority to the same degree as by the factor’s contracts.
(b) Under the Factors Act 1889.—The main object of the Factors Acts, in so far as they relate to transactions carried out by factors, has been to add to the number of cases in which third parties honestly buying or lending money on the security of goods may get a good title from persons in whose possession the goods are with the consent, actual or apparent, of the real owners, thus calling in aid the principle of French law that “possession vaut titre” as against the doctrine of the English common law that “nemo dat quod non habet.” The chief change in the law relating specially to factors has been to put pledges by factors on the same footing as sales, so as to bind a principal to third parties by his factor’s pledge as by his factor’s sale. The Factors Act 1889 in part re-enacts and in part extends the provisions of the earlier acts of 1823, 1825, 1842 and 1877; and is, so far as it relates to sales by factors, in large measure merely declaratory of the law as it previously existed. Its most important provisions concerning factors are as follows:—
Section I., s.s. 1. The expression mercantile agent shall mean a mercantile agent having in the customary course of his business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods;
2. A person shall be deemed to be in possession of goods or of the documents or title to goods when the goods or documents are in his actual custody or are held by any other person subject to his control or for him on his behalf.
4. The expression “document of title” shall include any bill of lading, dock warrant, warehouse keeper’s certificate, and warrant or order for the delivery of goods, and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorizing or purporting to authorize, either by indorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.
Section II., s.s. 1. Where a mercantile agent is, with the consent of the owner, in possession of goods or of the documents or title to goods, any sale, pledge or other disposition of the goods made by him when acting in the ordinary course of business of a mercantile agent shall, subject to the provisions of this act, be as valid as if he were expressly authorized by the owner of the goods to make the same; provided that the person taking under the disposition acts in good faith, and has not at the time of the disposition notice that the person making the disposition has not authority to make the same.
2. Where a mercantile agent has, with the consent of the owner, been in possession of goods or of the documents of title to goods, any sale, pledge or other disposition which would have been valid if the consent had continued shall be valid notwithstanding the determination of the consent; provided that the person taking under the disposition has not at the time thereof notice that the consent has been determined.
3. Where a mercantile agent has obtained possession of any documents of title to goods by reason of his being or having been, with the consent of the owner, in possession of the goods represented thereby, or of any other documents of title to the goods, his possession of the first-mentioned documents shall, for the purposes of the act, be deemed to be with the consent of the owner.
III. Enforcement of Contracts
1. Where a factor makes a contract in the name of his principal and himself signs as agent only, he drops out as soon as the contract is made, and the principal and third party alone can sue or be sued upon it. As factors usually contract in their own name this is not a common case. It is characteristic of brokers rather than of factors.
2. Where a factor makes a contract for the principal without disclosing his principal’s name, the third party may, on discovering the principal, elect whether he will treat the factor or his principal as the party to the contract; provided that if the factor contract expressly as factor, so as to exclude the idea that he is personally responsible, he will not be liable. The principal may sue upon the contract, so also may the factor, unless the principal first intervene.
3. Where a factor makes a contract in his own name without disclosing the existence of his principal, the third party may, on discovering the existence of the principal, elect whether he will sue the factor or the principal. Either principal or factor may sue the third party upon the contract. But if the factor has been permitted by the principal to hold himself out as the principal, and the person dealing with the factor has believed that the factor was the principal and has acted on that belief before ascertaining his mistake, then in an action by the principal the third party may set up any defences he would have had against the factor if the factor had brought the action on his own account as principal.
4. Where a factor has a lien upon the goods and their proceeds for advances made to the principal it will be no defence to an action by him for the third party to plead that he has paid the principal, unless the factor by his conduct led the third party to believe that he agreed to a settlement being made with his principal.
5. The factor who acts for a foreign principal will always be personally liable unless it is clear that the third party has agreed to look only to the principal.
6. If a factor contract by deed under seal he alone can sue or be sued upon the contract; but mercantile practice makes contracts by deed uncommon.
Authorities.—Story, Commentaries on the Law of Agency (Boston, 1882); Boyd and Pearson, The Factors Acts 1823 to 1877 (London, 1884); Blackwell, The Law relating to Factors (London, 1897). (L. F. S.)
FACTORY ACTS, the name given generally to a long series
of acts constituting one of the most important chapters in the
history of English labour legislation (see Labour Legislation);
the term “factory” itself being short for manufactory, a building
or collection of buildings in which men or women are employed
in industry.
FACULA (diminutive of fax, Lat. for “torch”), in astronomy,
a minute shining spot on the sun’s disk, markedly brighter than
the photosphere in general, usually appearing in groups. Faculae
are most frequent in the neighbourhood of spots. (See Sun.)
FACULTY (through the French, from the Lat. facultas,
ability to do anything, from facilis, easy, facere, to do; another
form of the word in Lat. facilitas, facility, ease, keeps the original
meaning), power or capacity of mind or body for particular kinds
