Not enforceable against the agent doctrine of privity

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Unformatted text preview: n who is authorised to enter into contracts on behalf of another person, called the principal • The contract is between the principal and the third party, and is generally not enforceable against the agent • Doctrine of privity not relevant in agency situation 27 Principal P The contractual relationship grant of authority Agent A 28 Agency: how it is created • By agreement (express or implied) • By operation of law under the doctrine of agency of necessity • Retrospectively by ratification of the agent’s acts done on behalf of the principal but without prior grant of authority negotiates contract on behalf of P Third Party TP 29 30 Agency: some examples • • • • Vitiating elements • ‘Vitiate’ means: to corrupt to damage to reduce value • Vitiating elements include: Mistake Misrepresentation Illegality Inequality between the parties Real estate agent Travel agent Insurance broker Share broker 32 Voidable vs void Vitiating elements • A vitiating factor operates to render a contract voidable or void retrospectively (ie void ab initio) If a contract is “bad” because of a vitiating element, it can be: • VOIDABLE: the contract will continue on foot unless the injured party elects to rescind (ie cancel) or avoid the contract or • VOID: void back to the moment of formation, as if it never existed (void ab initio) 33 34 Mistake Types of mistake • If a mistake operates, it often renders a contract void ab initio (from the very beginning) • Common mistake: both parties make the same mistake as to the existence or identity of the subject matter • Places the parties in the same position as if no contract had ever been made • Mutual mistake: parties are at cross-purposes – both parties have made a mistake but each party has made a different mistake • Unilateral mistake: only one of the parties is mistaken, and the other is, or should be, aware of this and does nothing to correct the mistake See Latimer at ¶5-620 to ¶5-695 35 36 Representation Misrepresentation A representation is a statement of fact made by one party to another, either before or at the time of contracting, relating to an existing fact or a past event, which induces the contract • In contract • In tort • Misrepresentation legislation Australian Consumer Law See Latimer at ¶5-700 37 Misrepresentation Misrepresentation • In tort • In contract Fraudulent Misrepresentation: Minor misrepresentation: - intention to induce a person to enter into a contract - “non-contractual” or “mere” misrepresentation - no remedy for breach of contract but may be remedies under other heads of law (such as tort/Australian Consumer Law) Innocent Misrepresentation: - misstatement of a material fact Major misrepresentation: - lack of intentional deceit - “actionable” misrepresentation - allows innocent party to cancel/rescind the contract - not known to be false Negl...
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This note was uploaded on 03/11/2014 for the course LEGT 2741 taught by Professor Leena during the Three '11 term at University of New South Wales.

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