Mr Berg was employed as Blackburn’s club manager in November 2012 and fired in December 2012. Under his service agreement he was entitled to payment of his full wage until the end of his fixed term contract in June 2015. This amounted to £2.25 million. Blackburn initially admitted its liability to Mr Berg under the agreement, but then sought to withdraw it, arguing its Managing Director did not have authority to conclude the contract on the terms he did. Blackburn argued that the Managing Director did not have actual authority to enter into a contract with Mr Berg other than on the basis that it was terminable on 12 months notice and compensation for early termination was capped at 12 months salary.

The High Court found that although the Managing Director may not have had actual authority to enter into agreement on the terms he did this was irrelevant to the agreement between Blackburn and Mr Berg. There was no limit to the Managing Director’s powers in the articles of association; no limit was communicated to Mr Berg and the Managing Director would have the usual authority of someone holding that office, which includes authority to make decisions for and bind the company in the ordinary course of its business. It was unreasonable to suggest that the Managing Director of Blackburn did not have implied or usual authority to sign employment contracts on its behalf. Blackburn’s case was unarguable and there would be no reason to permit Blackburn to withdraw its Admission. http://bit.ly/13L4Xxf