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Authorisation by way of acceptance of conduct

On 16, 10 2012 | No Comments | In Uncategorized | By Kadri Lensment

Jurisdiction – ESTONIA

In the course of performing economic or professional activities, from time to time it occurs that transactions are entered into and documents are signed by persons without the direct authorisation to enter into respective transactions granted by a principal. At the same time, the other party to the transactions is led to believe that the person acting as a representative is authorised to enter into the transaction. In the case of a dispute, there is a danger that the company on behalf of whom the person without the right of representation has given their signature, claims that it has not entered into the transaction.

The Supreme Court of Estonia clarified in its recent decision that in certain cases, it can be deemed that the principal has granted the authorisation. Namely, when the principal knows or ought to know that the person is acting as a representative on behalf of the principal and the principal accepts such activities by the person, that is, does not interrupt or bring it to an end. Thus, when the principal is aware that a particular person enters into transactions and signs documents on behalf of them, and has not interfered, it can be deemed that authorisation has been granted by way of acceptance of conduct.

In case the authorisation cannot be deemed to have been granted through acceptance, the transaction can nevertheless be valid if the person on whose behalf the person without the right of representation entered into the transaction subsequently ratifies the transaction. For example, the approval can be deemed from paying one bill that issued based on the transaction.