Chapter 9 PT 2 Flashcards
When can a principal be bound to the agent’s unauthorized conduct?
1) The principal will be bound to the agents unauthorized conduct if the principal ratifies the contract.
What needs to happen for a principal to ratify a contract?
1) For this to happen the agent had to have stated he was acting as an agent and if the representation was in existence at the time of conclusion
What is “Agency by Estoppel” and when does it occur?
1) Where the principle is prevented by estoppel to deny liability based on the
absence of authority.
2.1) For instance, the principal tells, the third party that A is his agent and then
the third party contracts with A in belief that he is contracting with the
principal.
2.2) Known as Agency by etsoppel
Can you explain the case of “Makate v Vodacom (Pty) Ltd” and its significance?
1) Makate v Vodacom (Pty) Ltd.
1.2) In this instance the principal can be held bound despite of the agents
actual authority.
1.3) This is where the agent had ostensible or apparent authority to represent
the principle, which will be the case where in the principle by words or content created an appearance that the agent had the power to act on the principal’s behalf.
1.4) Con Court held “misrepresentation that creates the appearance of
authority…and in the case of ostensible authority this element alone will suffice to bind the principle – nothing more is required”.
What is the doctrine of “undisclosed principle” and when does it apply?
1) The doctrine of undisclosed principle:
1.2) . Where A has actual authority to represent the principle but contracts in his
own name albeit secretly for the principle without disclosing to the third
party that they are acting in the capacity of an agent for the principle.
1.3) In this regard A will then be personally liable to the contract.
What happens when an agent informs a third party that they are acting on
behalf of an unidentified principal?
1) Alternatively if the third party learns of A’s agency then he may elect to claim performance from either A or the principal
Unidentified principal:
2) This is when A informs the third party that he acts on behalf of the principal
but refuses to reveal the principal’s identity and the third party is willing to
contract on the basis that the contract is solely between the third party and
the unidentified principal.
What is the rule regarding non-existent principals in common law?
1) Non-existent principal:
1.2) At common law, it is not possible to represent a non-existence principle. In
this instance, the contract is void ab initio and cannot subsequently be ratified when the principle comes into existence.
1.3) However it is not possible to contract on behalf of a corporation that has
yet to come into existence and adopted or ratified the contract into on its
behalf of the incorporation.
Relationship between agent and 3rd party
1) Suppose the agent acts out of authority and promises the third party that he is
acting as the agent for such principal. In that case, the agent is liable to the third
party by contract for breach of warranty of authority.
2) If the agent fraudulently or negligently misrepresented that he or she had the
necessary authority without warranting this fact, his liability is delictual in nature.
What is a “cession” in the context of transferring contractual rights?
Contractual rights are transferred by means of a cession, which entails substituting
creditors
What happens to the rights and duties of the creditor in a cession?
The rights (and duties) of the creditor are transferred to a third party who will step
into the shoes of the previous creditor
Whose consent is needed in a cession?
Consent of the creditor and third party is needed, but not the debtor
What is a “delegation” in the context of transferring contractual duties?
Contractual duties may be transferred by means of a delegation.
What happens to the debt in a delegation?
This involves the transfer of a debt to a third party
Whose consent is required in a delegation?
Consent is required from the new debtor, the old debtor, and the creditor.
When this occurs, the contract undergoes novation, meaning that the old debt is
deemed extinct, and a new one is created.
What is an “assignment” in the context of contract law?
1) Where a party to a contract wishes to withdraw and be substituted by a third party.
2)This can be achieved by a complete novation or transferring all the parties’ rights and duties
What is the relationship between a cession, delegation, and assignment?
This is a combination of a cession and delegation and is known as an assignment.
Performance by a third party
1) A third party may sometimes intervene in a contractual relationship between others
by making a performance that is owed by one of the parties to that contract.
2) For present purposes, note only that by such intervention the third party does not
become a party to the contract in question
Performance made to a third party
1) Suppose the parties agree that the debtor may discharge his obligation by making his performance to a third party (the adiectus solutionis cuasa).
2) In that case, such a third party is merely added for payment’s sake, and unlike in a stipulatio alteri, he does not become a creditor with his own right to claim performance
