## Facts

- Humble formerly operated a beerhouse (the Victoria Hotel) on his own account, then transferred the business to Fenwick & Co., a firm of brewers.
- After the transfer, Humble remained in charge as manager; the license stayed in Humble’s name and his name appeared over the premises.
- By private agreement with Fenwick & Co., Humble lacked authority to buy goods for the business except bottled ales and mineral waters; other goods were to be supplied by Fenwick & Co.
- Despite this limitation, Humble ordered cigars, Bovril, and other items from Watteau for use in the beerhouse.
- Watteau delivered the goods over time and extended credit only to Humble, without knowledge that Fenwick & Co. owned the business.
- When payment was not made, Watteau discovered Fenwick & Co. were the owners and sued them for the price of the goods.
- The county court entered judgment for Watteau for the cigars and Bovril (but not all items claimed), awarding £22 12s. 6d.
- Fenwick & Co. appealed to the Queen’s Bench Division.

## Issues

1. Whether an undisclosed principal is liable for a manager-agent’s contracts made beyond actual authority where the contracts fall within the authority usually given to an agent of that character.
2. Whether liability requires “holding out” or reliance by the third party when the principal’s existence was unknown at the time of contracting.

## Decision

- The Queen’s Bench Division dismissed the appeal and affirmed judgment for Watteau.
- Once Fenwick & Co. were shown to be the true principals, ordinary principal–agent rules applied.
- Fenwick & Co. were liable for purchases within the usual authority of a beerhouse manager, notwithstanding private instructions limiting Humble’s actual authority.
- Lack of “holding out” did not bar liability in a case involving an undisclosed principal.

## Legal Principles

- An undisclosed principal is bound by an agent’s acts that are within the authority usually confided to an agent in that position, even if the agent violated secret limitations imposed by the principal.
- Apparent-authority “holding out” is not a required basis of liability where the third party did not know a principal existed; otherwise secret limitations would routinely defeat claims once the principal is later discovered.
- The dormant-partner analogy supports the rule: internal limits between hidden and active participants do not defeat third-party claims for acts within ordinary authority.

## Conclusion

The court held that an undisclosed principal may be liable for contracts made by an agent acting beyond actual authority when the transaction is of a kind ordinarily within the authority of an agent in that role, even though the third party neither knew of the principal nor relied on any representation by the principal.


Watteau v. Fenwick, 1 Q.B. 346 (Q.B. Div. 1892)