Authority by representation – a rule lacking a theory: A reappraisal of Makate v Vodacom (Pty) Ltd 2016 (4) SA 121 (CC)

• DOI: https://doi.org/10.47348/ACTA/2021/a11
• Published date: 23 August 2021
• Author: Pretorius, C.
• Citation: 2021 Acta Juridica 297
• Date: 23 August 2021
• Pages: 297-320

297

https://doi.org/10.47348/ACTA/2021/a11

Authority by representation – a rule

lacking a theory: A reappraisal of

Makate v Vodacom (Pty) Ltd 2016 (4)

SA 121 (CC)

C-J PRETOR IUS*

In Makate v Vodacom (Pty) Ltd 2016 (4) 121 SA (CC) the Constitut ional

Court had to consider the di cult question whether an agreement

to negotiate compensation at a later date for an employee who h ad

invented something for his employer wa s enforceable, where i n the

absence of later agreement the issue would be referred to the Chief

Executive Ocer of t he employer for nal determin ation. Although

the court an swered this in the ar mative, the more pressing issue for

present purp oses was whether the represent ative of the employer who

had negotiated the agreement with the employee had the necessar y

actual or apparent authority to conclude the ag reement. In dea ling

with the mat ter of authorit y, the apex court took an u nconventional

approach to ‘ostensible’ or ‘apparent’ authorit y: Whereas t he basis of

such authority has trad itionally been seen as t he doctrine of estoppel,

the court held th at the expressions ‘apparen t authority’ and ‘ostensible

authority’ h ave no bearin g on estoppel as such, but rather refer to a

form of actual authorit y arisi ng from a representation of author ity

by the principal in respect of the agent. This article examine s the

court’s approach in th at regard and concludes that, a lthough the

decision att racts critici sm from a conceptual vie wpoint, there is merit

in such an approach if it is adapted and dened purely in terms of the

reliance theory.

I IN TRODUC TION

Although sl ightly dated, the Constitutional Court decision in

Makate v Vodacom (Pty) Ltd1 (‘Makate’) remains topical for two

reasons: on the one hand, the parties are at present still locked in

litigation despite the apex court ruling on the matter in 2016, and,

* B LC LLB (Pret) LLD (Un isa); Professor in the Dep artment of Privat e Law,

Universit y of South Africa.

1 2 016 (4) SA 121 (CC).

2021 Acta Juridica 297

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298 THE FUT URE OF THE LAW OF CONTR ACT

https://doi.org/10.47348/ACTA/2021/a11

on the other, the court’s interpretation and application of certain

legal issues remains controversial and somewhat perplexing. In

the latter regard, probably the most notable issue relates to the

court’s approach to the basis of a principal’s contractual liability

where there is ‘ostensible’ or ‘apparent’ authority, as opposed to

actual authority, on the part of the principal’s representative2 to

conclude the transaction in question. In such cases the principal’s

agent acts without authority in entering into an agreement on

behalf of the pr incipal. Pr ior to Makate the overwhel ming weight

of legal precedent and authority based the principal ’s liability

in such circumstances on the doctrine of estoppel: the principal

is held liable despite the agent’s lack of authority because of the

impression created by the principal that the agent was clot hed with

the necessar y authority and the third party contracting with the

agent was reasonably misled thereby. In Makate the majority of the

Constitutional Court adopted a very dierent approach and held

that the expressions ‘apparent authority’ and ‘ostensible authority’

have no bearing on estoppel as such, but rather refer to a form of

actual authority arising from a representation of authority by the

principal i n respect of the agent. In contrast, the minority decision

armed the traditiona l approach, received from Eng lish law, that

contractua l liabil ity in cases of apparent or ostensible author ity is

squarely based on estoppel.

Although there are other debatable issues relating to Makate,

this contr ibution focuses on the main is sue of apparent or ostensible

authority and seeks to explore the possibi lity that the majority was

partia lly correct in its approach, but that it unfortunately failed to

properly ventilate and apply the underlyi ng theory that could have

substantiated its decision. At the outset it should also be mentioned

that the minority decision was entirely correct in its appraisal of

the matter and its reliance on estoppel, but that by echoing other

aspects of reliance as a basis for contractual liability, the majority

decision suggests an alternative route for dealing with such

instances. An attempt will be made to show that these alter native

avenues are but parallel reections of reliance protection in the

ascript ion of contract ual liabilit y.

2 T he terms ‘represent ative’ and ‘agent’ wil l be used interchang eably, as will

the term s ‘ostensible autho rity’ and ‘ap parent author ity’.

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