Judicial Resistance to Merchant Demands: Factors and Paternalism in the King’s Bench

Abstract

Abstract This chapter turns to judicial resistance to merchant demands. In the 1820s, what counted as an agent's ordinary course of business became a major Parliamentary issue. The dispute was rooted in a profound disagreement between the government, merchants, and the Court of King's Bench — the most important common law court in the Regency period — as to what should properly be considered the course of business of a factor: a commercial agent given possession of his principal's goods to sell in his own name. The controversy arose over whether a factor had authority to pledge his principal's property. On the one hand, merchants contended that factors would typically appear as owners of the property, and so pledges made by a factor should bind principal's business assets under the doctrine of ostensible authority. The government took the same view — hoping to encourage foreign merchants to store and sell their wares in Britain through agents. However, the King's Bench rejected the argument, fearing that allowing factors to validly pledge their principal's property in respect of their own debts would facilitate widespread fraud and breach of fiduciary duty by factors. In turn, this would encourage the type of immoral trading which caused financial instability.