Philip Gameson Joinery Ltd v Lloyd

An agent who contracts for a principal remains personally liable unless the contract and surrounding circumstances show that personal liability was expressly or impliedly negatived. The fact that the principal is liable, or that the agent is known to be acting as an agent, does not itself exclude personal liability. The question depends on the nature and terms of the contract and the circumstances of its formation. Where individuals fail clearly to identify the company on whose behalf they act, and do not indicate that the other contracting party is the company rather than themselves, they may be personally liable.

The claimant supplied joinery and shop fittings for a Norwegian store. It sought the unpaid balance from the first and second defendants personally. The defendants contended that they had acted only as agents for Blue Steel International Ltd, a company incorporated in the British Virgin Islands, and that the contract was between that company and the claimant. The court tried as a preliminary issue whether the defendants were liable for £61,123.50, subject to pleaded set-off. The central question was whether the defendants had expressly or impliedly negatived personal liability.

1. Applicable principle. An individual is liable for contractual engagements made while acting for another unless, by the law of agency, the individual has expressly or impliedly negatived personal liability. The principal’s liability does not prevent concurrent liability of the agent. The fact that a person is known to be an agent is insufficient by itself to avoid liability.
2. Whether personal liability has been avoided depends on the nature and terms of the contract and the circumstances surrounding its formation. An agent may create privity between the third party and the principal alone, between the third party, principal and agent, or between the agent and the third party alone.
3. The court preferred the evidence of the claimant’s witnesses and rejected the defendants’ account. The defendants had not clearly identified Blue Steel International Ltd as the contracting party. They had not indicated that the claimant would contract with that company rather than with them personally, and neither defendant had expressly or impliedly negatived personal liability.
4. The surrounding circumstances supported that conclusion. The references to “Blue Steel International” did not clearly identify a limited company. The defendants used communications and business cards which did not disclose the relevant legal personality. The claimant’s conduct was consistent with believing that it was dealing with the defendants personally.
5. The answer to the preliminary issue was that the first and second defendants were liable, subject to the pleaded set-off, to pay £61,123.50. The remaining issues, including any loss suffered by the defendants and VAT, required further determination.

First-instance decision. No prior appellate decision is stated in the judgment.