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Lecture 6

Business Law – Lecture 6.docx

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Kate Curnow

Business Law – Lecture 6 – 26/08/2013 Agency Principal  Agent  Third Party (loops) Authority The third party will only have a contract with the principal if the agent was acting with the principal’s authority. If the agent is acting within the scope of their authority, the resulting contract is between the principal and the third party, and the agent incurs no personal liability, even if they are the person who signed the written contract. There are three main ways in which an agent can be authorised to act on a principal’s behalf: - Express actual authority - Implied actual authority; and - Apparent authority Express Actual Authority The principal can expressly authorise the agent, in writing or verbally, to act on their behalf in making a contract. A power of attorney is a written grant of express actual authority to an agent. Implied Actual Authority The principal can authorise the agent to act on their behalf by implication, for example, by instructing the agent to carry out a particular task for the principal or by appointing them to a particular position in a way the makes it obvious that the agent will be required to enter into a contract with a third party on the principal’s behalf. Apparent Authority The principal may not have actually authorised the agent to act on their behalf but the agent will nevertheless have apparent authority if: - The third party did not know the agent did not have express of implied actual authority; - The principal ‘held out’ the agent as having authority to act on the principal’s behalf e.g. by appointing the agent to a particular position, or by holding the agent out as having authority in the past; and - The third party relied upon that holding out and assumed that the agent had actual authority Terms of the Contract Express Terms + Terms Implied by Court + Statutory Terms = Terms of Contract The terms of the contract are the specific details of the agreement, including each party’s rights and obligations. Broadly speaking, there are two types of contractual terms: express terms and implied terms. Implied terms include those implied by the courts and any relevant statutory terms. Express Terms If a term is in a written contract that has been signed by the parties, it is a binding and enforceable term of the contract, even if one of the parties has not actually read and understood the written contract. A statement that is not contained in a written and signed contract will still be an express term of the contract if the other party is given reasonable notice of the statement before the contract is formed. Terms Implied by Court Courts are frequently willing to imply a term into a settled contract to ‘fill the gaps’ as long as it is: - Reasonable and fair - Necessary to make the contract viable - So obvious that it ‘goes without saying’ - Able to be clearly expressed, and - Consistent with the express terms The court will imply into the contract a term of which the parties are deemed to be aware as a result of prior dealings Statutory Terms The Sale of Goods act 1986 (QLD) implies statutory terms that protect the buyer into contracts for the sale of goods. A contract for the sale of goods is a contract where the seller transfers, or agrees to transfer, the ownership of goods to the buyer in return for a monetary price. In every contract for the sale of goods there is an implied condition that: - The seller has title i.e. the right to sell those goods to the buyer - The goods will correspond with their description - The goods will be of merchantable quality - The goods will be fit for their purpose and - The bulk of the goods will correspond with the sample Disclaimers A disclaimer is a term providing that a party will not be in breach despite failing to perform one or more of their contractual obligations. Whether a disclaimer will effectively protect the party from liability for breach of contract depends upon: - Whether the disclaimer is in fact a term of the contract, and - Whether the disclaimer will be interpreted as applying to the particular breach in question The disclaimer will only be a term of the contract if: - It is included in a signed written contract; or - It was bought to the other party’s attention by reasonable notice before the contract was formed; or - It is implied into the contract as a result of prior dealings If the disclaimer is contained in a contract with another business, the courts will presume that the parties had equivalent bargaining power and will interpret the disclaimer neutrally and without favouring either party. If the disclaimer is contained in a contract with a consumer, the court will interpret the disclaimer contra proferentem, or against the interests of the party seeking to rely upon it (the business). Contra proferentem - ag
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