Parties Flashcards
What is the general rule in relation to privy of contract?
One can only bring action against a party under a contract where they are a party to the contract themselves.
Give the main exception to the rule of privy of contract.
The Contract rights of Third Parties Act 1999.
Under the C(RTP)A 1999, when can a third party acquire rights?
1) If the contract expressly provides that they may acquire a benefit under the contract (s1(1)(a)); or
2) The term purports to confer a benefit on them (s1(1)(b)).
Explain when the provision of s1(1)(b) may not apply (ie where the term purports to confer a benefit on a third party).
This exception under the C(TP)A 1999 will not apply if on true construction of the contract, it was not intended that the term be enforceable by z third party (s1(2)).
This means a third party will not be able to bring action under the statuary provision os s1(1)(a) where it was not intended that term in the contract was to be enforceable by a third party at the time the contract was made.
When can an agent bind a principal to a contract?
Where they have authority to do so.
This could be express or implied authority.
Who is a third party in the context of agency?
The party who contracts with the agent (with the agent acting on behalf of the principal).
List some common examples of agents.
- travel agents;
- insurance brokers;
- ticket agents;
- shop assistants;
- auctioneers;
- company directors.
Explain the principle of actual authority.
This is where agent has actual authority to bind the part giving them authority (the principal) to contracts.
This authority can be express or implied.
The third party must believe they have contracted with an agent who has the authority of the principal.
Express actual authority will cover situations where the agent is acting within the exact express remit the principal has given them.
Implied actual authority will be where the agent has authority to act, but have gone beyond the agreed or implied remit they have been given by the principal. ie the agent has authority to act, but maybe not in the way the principal intended to grant them.
Key point is the agent must have been given some form of authority by the principal, and the third party must believe the agent is acting with authority to bind the principal.
Explain apparent authority.
This is where the agent does not have authority from the principal to act and bind them to contracts with third parties.
Apparent authority arises where the following three conditions are satisfied:
1) at some stage the principal must have represented (by words or conduct) that the agent had authority;
2) third party must rely on this representation believing the agent had authority; and
3) the third party must alter their position (eg by entering into a contract).
Does an authorised agent have ant rights or liabilities under a contract?
No.
What is the difference between implied actual authority, and apparent authority?
Apparent authority is where the principal has made it apparent to the third party that the agent has authority, the third party has relied on this representation believing the agent has authority and the third party has altered their position in. some way (usually by entering into a contract).
Implied actual authority refers to the authority the principal has given the agent directly. The agent will therefore be binding the principal to contracts with third parties without the involvement of the principal due to the agent having authority to act in a certain way. Here the agent may exceed the remit of authority given to them, but they will likely be deemed to have authority none the less.
EG: principal may say to a manager of a pub which he owns, not to buy anything other than beer. if the manager then buys cigars, he would be acting with implied actual authority. He does not have express authority to buy the cigars, but this is something a manager of a pub could reasonably be expected to do in the eyes of the third party.
What constitutes a representation from the principal to the third party that the agent has authority to deal with them?
This does NOT have to be verbal or written.
If the principal owns a car dealership and the sales manager sells the third party some cars, this will bind the principal. The very fact the SM is selling the cars in his professional capacity as an employee constitutes an implied representation from the principal to the third party.
This would be binding regardless of whether the SM had actual authority from the principal to sell (for example) that number of cars to the client.
Explain the decision in Watteau v Fenwick.
Where the agent acts within the usual authority of someone in that particular profession., they have implied actual authority to bind the principal and enter the contract.
