High Court finds private equity fund bound by its agent acting with apparent/ostensible authority

The High Court has found in favour of a guarantor in its claim against a private equity fund for sums due under a promissory note or a corporate counter-guarantee, finding that the fund's agent had apparent/ostensible authority to bind it: Sanlam General Insurance Ghana Ltd v Sustainable Growth Fund II SCSP SICAV-SIF [2025] EWHC 559 (Comm).

In the court's view, in determining the question of ostensible authority, it was legitimate to look at the whole of the correspondence that followed the signature of the counter-guarantee, as well as the lack of any assertion by the fund that its agent did not have the relevant authority to sign on its behalf (up until the defence was filed). The court observed that it was "very difficult" for the fund to argue that its agent lacked ostensible authority, particularly since the agent had signed not only the key contractual documents at the heart of this dispute, but also all related correspondence and the defence documents on behalf of the fund during the proceedings.

The decision highlights that when an agent's authority to sign a contract is questioned, the court may take post-contractual communications into consideration. This appears to be because such conduct can serve as an indication that there was no genuine issue about the agent's authority. While this approach may seem counterintuitive, a similar principle applies to contract formation generally, where conduct which post-dates the conclusion of the contract can be taken into account (see our blog post). The present decision therefore reinforces the importance of consistent and proactive post-contract conduct by the principal.

For more information see this post on our Banking Litigation Notes blog.