In Marlbray Ltd v Laditi,1 the Court of Appeal considered the question whether, where A signs a contract with C for himself and B, but without B’s authority, there is nevertheless a contract between himself and C. There appears to be no previous authority directly in point.

The appellant, Marlbray, was the owner of a development site on which an “apart-hotel” was to be constructed, consisting of over 1,000 hotel rooms to be sold to members of the public on 999-year leases, giving the lessees the right to income from the rooms and some occupancy rights. They were marketed at a well-publicised sales fair, at which Marlbray hoped to achieve immediate exchanges of contracts for as many rooms as possible. Exchanges were to be effected between Marlbray’s solicitors and firms of solicitors whose presence at the fair had been arranged by Marlbray and for whose assistance purchasers queued up.

The respondents, a married couple, H and W, attended the fair, but W was outside with the children for much of the time and was anyhow not at all keen. H, having been advised by one of the firms of solicitors in attendance, signed a contract to buy a lease for £315,000 on behalf of “Purchaser”, defined as himself and W. He did not have W’s authority, and she did not ratify the contract. Marlbray’s solicitors signed the contract on its behalf without having been told of H’s want of authority. H paid a deposit of £1,000: further deposits, amounting to 25 per cent of the price, were payable in stages, with the balance of the price due on completion of the development some years later.

H was clearly liable for damages for breach of warranty of authority, but before the trial judge2 leading counsel for Marlbray conceded that, if it was found (as it later was) that W had neither authorised nor ratified the contract, no binding contract would have been concluded, as there was no agreement by one of the parties. On appeal, different leading counsel contended, unsuccessfully, that there had been ratification, but did not initially seek to resile from the concession.

Despite this, an unusually interventionist Court of Appeal refused to accept the concession, circulated a draft judgment which encouraged Marlbray belatedly to resile from it and, after considering further argument, held that there was a contract between Marlbray and H alone, and that Marlbray was entitled to retain the deposits paid because H had failed to complete.

The court made its decision in two stages. First, it sent the draft judgment of Gloster LJ to the parties, its essence being contained in the following passages: