Parties to a contract Flashcards
(16 cards)
The Contracts [Rights of Third Parties] Act 1999 a third party can acquire rights to a contract if:
what is the general rule.
a] the contract expressly states they may acquire a benefit
b] the term purports to confer a benefit on them [daughter receiving money from parents for uni]
if not the general rule is
Only parties to a contract can enforce its terms or be bound by them (Dunlop v Selfridge [1915]).
Under what circumstances can a third party use the Contracts (Rights of Third Parties) Act 1999?
The contract expressly provides that they can, or
The contract confers a benefit on them, and the right is not excluded.
Q6: Where does the Contracts (Rights of Third Parties) Act 1999 not apply?
The Act does not apply where the parties did not intend for a third party to enforce a term, such as when there is an exclusion clause explicitly denying third-party rights.
What remedies are available to third parties under the Contracts (Rights of Third Parties) Act 1999?
Third parties can access any remedy that would be available to them as if they were a party to the contract.
Third party, Principal and Agent
What is actual authority?
It includes actions and circumstances that indicate the agent’s authority to act on behalf of the principal.
How can actual authority be granted?
Expressly through clear agreement or implied through actions
What happens if an agent acts with actual authority?
The principle may not be bound by the agents actions
What is apparent authority?
A principle represents that an agent has authority and the third part relies on this conduct.
3 conditions for apparent authority
- Principle represents the agent has authority
- 3rd party relies on representation
- Third party enters into a contract based on this
Can a principal be bound by a contract made by an agent with apparent authority?
Yes, if the agent had apparent authority, meaning the principal represented the agent had authority, and the third party relied on this representation to enter into the contract.
Q7: What is an example of apparent authority?
In the example provided, Paul employed Abba Ltd as his selling agent and instructed them to sell rocking horses for at least £500. When Nigel approached Paul directly, Paul referred Nigel to Abba Ltd, indicating they were his agent. Abba Ltd sold a rocking horse to Nigel for £400. Despite Paul’s refusal, he may be legally obliged to honor the sale if Abba Ltd had apparent authority to bind Paul.
if a 3rd party really didnt know that the act was unauthorised, can it be set aide
No. If the 3rd party was the party acting in good faith then third parties are protected unless they knew or suspected the act was unauthorized.
Minors – Trading Contracts vs Necessaries
A minor is not bound by a trading contract (e.g., for resale or business), but is bound by a contract for necessaries, which includes goods or services beneficial to the minor’s lifestyle or education (💡 Nash v Inman [1908]).
💡 Example: A 17-year-old is not bound by a contract to buy stock for resale, but can be bound by contracts for lessons or a mobile phone if they are for her benefit.
Implied Actual Authority – Agency Law
A principal can be bound by an agent’s actions if the agent has implied actual authority, meaning the authority is inferred from the agent’s role or usual conduct in that type of business (💡 Watteau v Fenwick [1893]).
💡 Example: A pub manager who buys cigars, despite instructions not to, still binds the owner, because purchasing cigars is within the usual authority of someone managing a pub.
