Chapter 4: Parties - Privity, Third Party Rights, and Agency

Flashcards covering Chapter 4: Parties, including the doctrine of privity of contract, the Contracts (Rights of Third Parties) Act 1999, and the principles of actual and apparent agency authority.

Under the doctrine of privity of contract, who has rights and liabilities under a contract?

Only the parties to the contract have rights and liabilities under it.

What rule was demonstrated in Tweddle v Atkinson regarding third parties?

Even where the contract expressly stated that a third party could enforce it, the third party could not enforce it.

Under the Contracts (Rights of Third Parties) Act 1999, what are the two circumstances where a third party can enforce a term?

A third party can enforce a term if the contract expressly says they may under s 1(1)(a), or if the term purports to confer a benefit on them under s 1(1)(b) (unless on a true construction the parties did not intend it to be enforceable under s 1(2)).

How must a third party be identified to enforce a contract term under the Contracts (Rights of Third Parties) Act 1999?

The third party must be identified by name, as a member of a class, or by description.

What specific type of contractual protection does the Contracts (Rights of Third Parties) Act 1999 extend to third parties?

It extends to the benefit of exemption clauses.

What practical example illustrates third party enforcement under the Contracts (Rights of Third Parties) Act 1999?

Gift receipts, where the recipient can take faulty goods back.

In agency law, how are the principal, the agent, and the third party defined?

The principal is the person the agent acts for; the agent has the power to change the principal’s legal relations; and the third party is the person who contracts with the principal through the agent.

Between which parties is a contract formed in an agency transaction, and what happens to the agent?

The contract is between the principal and the third party. The agent drops out.

Why are estate agents usually not considered agents in the legal sense?

Because they only advertise and facilitate rather than holding the power to change the principal's legal relations.

What is actual authority, and how is it determined?

Actual authority is express or implied (such as acts usually done by that type of agent or customary in the trade) and is worked out from what the parties said and did and the surrounding circumstances.

What three conditions must be satisfied for a principal to be bound under apparent (ostensible) authority when there is no actual authority?

1. The principal represented (words or conduct) that the agent had authority; 2. The third party relied on it; 3. The third party altered their position (for example entered the contract).

From whom must the representation originate to establish apparent (ostensible) authority?

The representation must come from the principal, not the agent.

In the example where Paul sends Nigel to Abba Ltd and Abba sells for £400 below its £500 limit, what are the legal consequences for Paul and Abba?

Paul is estopped from denying authority and is bound to the contract, while Abba is liable to Paul for breach of the agency agreement.