Parties to the contract Flashcards
What is divisibility of performance and what factors do you have to take into account?
Divisibility is when performance can be broken into parts.
Factors:
1.Nature of the performance
2. Intention of parties
What is indivisibility through logic?
●If A sells ten books to B and C, the performance is divisible because the delivery of the ten books can be physically split between the parties (e.g. five each).
●However, if B and C want to buy one book together, the performance cannot physically be divided - delivery is indivisible
What is indivisibility through intention?
●If A is selling a collection of ten rare books and intends that they all be sold together as a collective unit, the performance is indivisible by reason of the intention of the parties even though it is physically possible to divide the performance into separate components.
Definition of simple joint liability?
Debtor: Simple joint liability means that each of the debtors are liable only for a proportionate share of the performance, and these shares are presumed to be equal
Creditor: Likewise, simple joint entitlement means that each co-creditor is entitled to claim a proportionate share of the performance and shares are presumed to be equal.
De Pass v The colonial government
This case held that simple joint liability is the norm and any other form of liability depends on the existence of special circumstances. If the contract doesn’t say anything to the contrary, simple joint liability is presumed.
Consequences of simple joint liability: effect of release and right of recourse if one debtor pays
Effect of release:
■ Where the creditor releases one of the co-debtors from delivery or payment of their share, this does not automatically release the other co-debtors from their obligation.
Right of recourse if one pays:
a joint debtor who has paid more than their share of the debt will probably have no right to recover the excess from the other co-debtors, unless there is an agreement to this effect, or unless the requirements for enrichment liability are satisfied.
Definition of collective joint liability?
● Where co-debtors are liable to make a performance jointly as a collective, the creditor may not demand performance, in whole or in part, from any one of the debtors individually.
● Where co-creditors are jointly, as a collective, entitled to a performance from a debtor, no one of the creditors can claim the entire performance, or part of it, from the debtor; they have to act collectively
Definition of joint and several liability?
each co-debtor is liable for the full amount of the debt, and the credit can accordingly claim the full debt, or any lessor amount, from any one or more of them
Consequences of joint and several liability: effect on payment, release and right of recourse
Effect of payment:
■ If B pays creditor in full, he has an automatic right of recourse against A and C for their proportionate share (unless they come to another agreement).
Effect of release:
■ When a creditor releases one of the co-debtors from the debt, the liability of the remaining co-debtors is reduced proportionately
■ If all the debtors owe the same amount and one is released from their debt, the effect of the reduction will be the same as with joint simple liability (e.g. where three debtors owe R100, the two unreleased debtors still owe one-third of the debt).
■ If the debtors owe different amounts, the amount they owe will be affected.
Right of recourse:
■ Where one of the debtors has paid the full amount of the debtor, or more than their proportionate share, they have an automatic right of recourse against the co-debtors to recover their proportionate share of the debt.
■ Where a creditor receives more than their share from the debtor, the other co-creditors have a right of recourse against that creditor.
Belligan v Clive Ferreira outcome?
the court concluded that Ms Belligan couldn’t escape the consequences of the partnership agreement, which expressly provided for the proportions in which the co-debtors would share profits and losses and prohibited one partner from making a profit off of a co-partner.
■ Ms Bellingan could only claim the loan amount minus her husband’s debt, in the proportionate shares in terms of the agreement (not jointly and severally).
Bellingan v Clive Ferreira facts?
● Ms Bellingan bought the right to claim the money from the partnership from the bank, but there was a dispute as to how and how much she could claim
○ The applicant argued that she could claim the full amount of the debt jointly and severally from the respondents, as the bank would have been able to do.
○ The partners held that they were only liable to pay Ms Bellingan in her capacity as a co-partner for their proportionate share of the debt, as set out in the partnership agreement
Requirements for representation?
- Authority or power to represent the principal
2.Representative must not be party to obligations - The principal must exist at the time of the conclusion of the contract
The doctrine of undisclosed principal?
● The agent must not be one of the contracting parties, however, the doctrine of the undisclosed principal may come into play where the agent does have authority to represent the principal but hides the fact that they are acting on behalf of them then the agent will be personally liable to the third party (to protect the third party)
● In terms of the doctrine, the principal is permitted to emerge from obscurity and demand performance from the third party, provided the third party hasn’t performed yet and they are not prejudiced (e.g. they incurred some kind of expenditure) by the switch.
● Alternatively, if the third party comes to learn that the agent was acting on behalf of the principal, they can choose to claim performance from either the principal or the agent.
● Their election is final, however, in that if the principal successfully sues the one, they cannot thereafter proceed against the other.
Effect if the agent has no authority?
■ If the agent had no authority or was acting beyond the scope of their authority, the general rule is that the principal will not be bound to the third party; no contract arises unless one of three occurs:
- The principal ratifies the agent’s lack of authority
- The principal is estopped from denying their lack of authority - all elements of esstopel must be met:
- The principal misrepresents to the third party that the agent has the necessary authority.
- The third party relied on that representation
- It would be prejudicial to the third party if the principal could deny the existence of the contract.
- The agent has ostensible authority
■ Where the principal by words or conduct created an appearance that the agent has power to act on the principal’s behalf, the agent is deemed to have ostensible authority.
Definition of stipulatio alteri
● Party A (sipulans) stipulates the benefit to be conferred onto C (third party) and extracts a promise from B.
● Party B (promittens) promises to confer the benefit on C, or at least offer the benefit.
● B then has to offer the benefit to C, who can then accept or deny the benefit.
