Law Of Agency

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LAW503 CHAPTER 1

ADDITIONAL POINT:

1) PRIVITY OF CONTRACT & ITS EXCEPTION

-Privity of contract states that under a particular contract, only the original parties are subject to the rights and liabilities of that contract. This means it is only these parties which can sue/be sued.  Third parties do not have rights under that particular contract, and cannot hold one of the original parties liable for something that occurred under the contract.

-Privity of Contract through Assignment:

Assignment can occur where one of the original parties to the contract transfers their rights/obligations under a particular contract to a third party. The third party then becomes the ‘assignee’. Once this has been done, the ‘assignor’ (i.e. the original party who assigned his rights) loses his rights under the contract. He therefore does not have to comply with any obligations under the contract either. This means that he can no longer be held liable for any problem which results from the contract. The assignee now has to perform the assignor’s duties. Assignment can occur without the other original party’s acceptance.

-Privity of Contract through Delegation of Duties

This method involves one of the original parties to the contract delegating some of their duties to a third party. The third party (known as the delegatee), is now required to perform these duties under the contract. The original party (known as the delegator) is relieved from having to perform the specified duties. The major difference between the delegation of duties and assignment is that through the delegation of duties, the delegator remains liable for the actions of the delegatee. This means that if the delegatee in some way fails to carry out the duties which he is now responsible for, the delegator is responsible for ultimately ensuring that those duties are carried out. Liability thus still rests with the delegator.

2) DISCHARGE OF CONTRACT

-Performance
-Frustration
a) Destruction of the subject matter

( Taylor V Caldwell) ->The claimant hired out a music hall in Surrey for the purpose of holding four grand concerts. The claimant went to great expense and effort in organising the concerts. However, a week before the first concert was due to take place the music hall was destroyed by an accidental fire. The claimant sought to bring an action for breach of contract for failing to provide the hall and claiming damages for the expenses incurred.
Held:
The claimant's action for breach of contract failed. The contract had been frustrated as the fire meant the contract was impossible to perform.

b) Personal incapacity will generally render the contract frustrated.

Condor V Baron Knights ->  A 16 year old agreed by contract to play the drums for the defendant band for 7 nights per week for 5 years. The claimant suffered a mental breakdown and was told by his doctor that he should not perform more than 4 nights per week. The band dismissed him. He brought a claim for wrongful dismissal.
Held:
The claimant's action was unsuccessful as his medical condition made it impossible for him to perform his contractual obligations and the contract was thus frustrated.

-Breach
-Agreement Tweet

LAW503 notes

ADDITIONAL NOTES:

1) STATEMENT (MERE REPRESENTATION) & TERMS

- Before entering into a contract, various statements will often be made by one party in order to encourage or induce the other party to enter into the contract. A dispute may later arise as to which of the statements made should be considered a part, or a term, of the contract, and which should be taken as merely pre-contract talk, and therefore not a part or term of the contract. Parties to a contract are bound only by its terms, not by any peripheral statements that may have been made.

- A mere representation is a statement made during negotiations but it may not form part of the contract. A mere representation (if breach) will not give rise to contractual liability whereas a term of the contract will.

- TIMING:  the longer the interval is between the making of the statement and the reaching of the final agreement and contract, the less likely it is that the statement will be considered to be a term of the contract.

-RELATIVE EXPERTISE:  The fact that the maker of the statement had a special knowledge or skill compared with the other party will make the statement more likely to be a term. Where the agreement was subsequently reduced to writing and the statement was not included, it is less likely to be a term.

-THE PAROLE EVIDENCE:  If an agreement is eventually put into writing, then the statement is more likely to be a term of the contract.

2) TERMS MAY BE CONDITION OR WARRANTIES

-Contracts will always contain different types of terms (said or written), some more important than others. The more important terms are called "conditions", the less important terms are called "warranties".

- Conditions are so important that without them one or other of the parties would not enter into the contract. Consequently, to make a condition falsely, or to breach a condition, is viewed so seriously that the wronged party will be entitled to treat the contract as void, voidable or rescinded.

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-Where the term is a warranty, the wronged party will only be able to seek monetary damages for any loss suffered. The contract itself will remain binding on both parties.

- In making a decision as to whether a term is a condition or a warranty, the court will consider all the surrounding circumstances, including the seriousness of the consequences if the contract is held to be non-binding, and the intentions of the parties at the time they made the contract.

3) EXCLUSION CLAUSES

- It is possible to have a term in the contract which excludes one of the parties from responsibility for something that may go wrong in the performance of the contract or limits that responsibility. It is called an exclusion clause or an exemption clause. For example, an exclusion from liability for damage done to the lawn by a builder's backhoe might be included in a contract between the builder and a home owner who is having an extension built to their home.

- Where a contract is a document signed by the parties, they will generally be bound by the exclusion clause in it.

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