Chapter 11 Flashcards
What is an agent in a contract of agency?
An agent is given the power to act on behalf of their principle
What is a principal in a contract of agency?
Someone who has an agent working for them
Is an agent bound in contract with a third party when working on behalf of someone else?
No - and implies no rights or liabilities under the contract
What is the exception for agents not being liable when working with a third party?
When the agent hasn’t specified that they are working on behalf of someone else - then the agent is treated as the principal
What does the rule on implied authority permit the agent to do?
Permits the agent to perform all subordinate and incidental acts necessary to exercise their express authority
When does apparent authority arise?
It arises whether or not there is an agency agreement between principle and so-called agent.
Apparent power comes about when:
•Principal makes representation by words to agent
• Same as above but for third party
• third party must’ve relied on representation made to them
What are the duties of an agent?
To: • Obey their principal • Perform duties • Account to principal by keeping accurate books • Act in good faith • Not to make secret profit • Not to delegate • Not to disclose
What are the duties of a principal?
To:
• Pay the agent
• Indemnify the agent for acts lawfully done
In a guarantee situation there are 2 contracts, what are they?
- Principal contract - eg loan from bank
* Collateral contract - where third party agrees to compensate if the other party doesn’t pay - between 3 parties•
What type of contract is a guarantee contract?
Tri-partite contract (three parties)
- Guarantor
- Principal creditor
- Principal debtor
Describe the 3 parts to a hire purchase contract
- Contract of bailment - where hirer obtain permission of use of goods
- Option contract - enables hirer to enter into contract for purchase of goods
- Contract of sale - hirer exercise their option
What is a contract of loan of money? and what type of relationship does this contract create?
A contract whereby one party (Lender) agrees to pay money (the principal sum) to another party (borrower) and in return the borrower promises to repay that sum on demand / at future date
This contract creates a debtor / creditor relationship
Give examples of contracts that could be thought to be contacts of loan of money but AREN’T
- Trade debt
- Contract for the hire of chattels
- Where a company declares a dividends
- where a company sells an asset
What are the duties of the lender under a contract for loan of money?
to put the funds lent under the control of the borrower in accordance with the terms in the contract
What is a contract of option?
A contract whereby the “grantor” of the option offers to enter into a “major contract” with another person (the grantee) and makes a separate contract of option to keep their offer open
What is the exercise price?
The amount paid under the major contract to acquire the subject matter of the contract
When an option is granted, there are always 2 contracts, what are they?
An option contract which is unilateral as it imposes duties only on grantor
A Major contract which is bib-lateral as both parties have duties under it
what are call and put options?
Call = option to sell an asset
Put = option to buy an asset
What does the grantee acquire when an option is granted in respect of land?
They acquire an interest in the land
When does a right of pre-emption arise?
When the owner of property contracts with others that if the shareholder decides to sell their shares, they must first offer shares in preference to another person
