Parties

Question 1

What is the privity of contract?

Answer 1

Only the actual parties to a contract are bound by it and therefore have rights (i.e. the right to sue for breach of contract) and obligations under it.

Question 2

How can a third party acquire rights under Contracts (Rights of Third Parties) Act 1999?

Answer 2

The contract must expressly provide that they may acquire a benefit or the term purports to confer a benefit on them.

For a third party to enforce a term of the contract in their own right, they must be expressly identified in the contract by name or as a member of a class (eg ‘employees’) or answering a particular description.

Question 3

Who are agents?

Answer 3

Persons who have the ability or power to change the legal relations of the person for whom they are the agent (principal).

Question 4

How do you work out whether an agent has actual authority?

Answer 4

The actual authority of an agent is worked out by looking at what the parties have said and
done, and any relevant surrounding circumstances.

It can be granted expressly, or it can be implied.

Question 5

How is apparent authority created?

Answer 5

At some stage the principal must have represented (by words or conduct) that the agent
had authority;

The third party must rely on this representation, believing that the agent has authority; and

The third party must alter their position e.g. by entering into a contract.