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Unauthorised Representation - Netherlands

For the benefit of the purchase of a property portfolio, A obtained a mortgage loan from a bank of approximately € 3 million. A had to repay this loan at the latest on 14 June 2013.

Subsequently, A identified B as a buyer of the mortgaged properties of A and for this the lawyer of A made all the necessary arrangements with the relevant authorities and the said lawyer committed to B that the sale agreement shall be signed by A on a particular place and time.

Meanwhile, A identified another person who would be paying more and refused to honour the agreement with B with the argument that he had never appointed his lawyer as his power of attorney and the said lawyer had acted without his written authority.

The matter went to Supreme Court which agreed with the Court of appeals and gave stress on the conclusions which can be drawn from the actions of the various parties in the absence of any specific power of attorney.

The court concluded that  the actions of the Lawyer, even in the absence of a power of attorney from A, could be attributed to A. A by his own actions (which includes omissions) had (also) created the appearance of representative authority which was relied upon by B.

It was established that A had not sought contact with B. According to established case law it is also possible without such own actions, that the appearance of representation can be attributed to A, namely when, as in this case, the other party had justifiably relied on facts and circumstances which are at the risk of A and from which, in public opinion, such an appearance of representative authority can be derived. Now it has been ruled that this is the case here, it is no longer relevant whether A, as he asserted, wished to avoid the sale to B and had not intended to issue a power of attorney to the Lawyer.

Here the Lawyer had all the relevant documents for the sale and transfer of the property portfolio available to him, is particularly important. A asserted that those were still in the Lawyer’s possession due to his involvement in proceedings relating to the property portfolio previously conducted by him for A. Even if this is accepted, this does not detract from the fact that this concerns a circumstance which relates to A and could have contributed to the expectation created with B. The defence put forward by A implies after all that the Lawyer had received the relevant documents – being for a different purpose – from him. This circumstance could therefore be taken into consideration in the assessment of the Court of Appeal that A, in his relationship with B, bears the risk of the unauthorised representation.

The Court of Appeal also included in its assessment that B knew that the Lawyer is a lawyer and that he had previously assisted A in proceedings relating to the property portfolio. The Court of Appeal also pointed out that during the personal hearing relating to the relevant contact between the Lawyer and B, the Lawyer declared that “B knew that he acted for A as lawyer”. Partly because it was established that A had agreed that the Lawyer would look for a potential buyer for the property portfolio in his own network, these circumstances can also contribute to the view of the Court of Appeal that the appearance created by the Lawyer must be attributed to A.

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