Abstract

For nearly 120 years, South African courts have been grappling with the concept of an irrevocable authority – presumably a much-desired concept in business transactions, as demonstrated by the number of cases on this topic. Two distinct approaches have been identified: Some courts have held that an authority is irrevocable if the agent has a legitimate commercial interest in the authority, while the more common approach is that an authority can be irrevocable only if it is “coupled with an interest”. Unfortunately, due to contradictory judgments, the meaning of the phrase “coupled with an interest” has never been absolutely certain. Recently, uncertainty resurfaced in Medicross Healthcare Group (Pty) Ltd v Dr LH Linde & Associates. In an effort to provide context for this dilemma, this note presents an overview analysis of South African case law on irrevocable authority, questioning whether the law has become settled, certain and predictable, and identifying remaining unanswered questions. This note argues that judgments holding that an authority is irrevocable if the agent has a legitimate commercial interest in the authority should be disregarded as having been tacitly overruled by subsequent decisions of the Supreme Court of Appeal. It seems that the only true irrevocable authority exists where it was granted either as security, or as a means of protecting or facilitating security rights granted through, for example, a cession or mortgage. However, as this note will show, there is no clarity on whether both are instances where the authority is truly irrevocable, or only because of the security rights already acquired. Unfortunately, there are no certain and comprehensive answers to these questions in the law. Until the courts or the legislature definitively clarify these issues, the law on authority will remain in an unsatisfactory state.