Unit 3 - Parties & Capacity

Question 1

What is privity of contract?

Answer 1

Only a contracting party can sue or breach of contract or be liable for breach.

Question 2

Can a party acquire rights to sue under statute?

Answer 2

The Contracts (Rights of Third Parties) Act 1999 states that a party can acquire rights if:

The contract expressly provides that they may acquire a benefit

The term purports to confer a benefit on them (this must be express to be enforceable)

Question 3

What powers or abilities do agents have?

Answer 3

To change the legal relations of the person for whom they are the agent.

e.g. a director of a company, shop assistants, auctioneers

Question 4

What are the characteristics of actual authority by an agent?

Answer 4

What the agent has said or done with any relevant circumstances.

It can be granted expressly or implied.

The law regards the acts of the agent as the act of the principle.

Question 5

What are the characteristics of apparent authority by an agent?

Answer 5

1. At some stage, the principal must have represented that they had authority
2. The third party must rely on this representation that the agent had authority
3. The third party must alter their position by entering into a contract

Question 6

When are minors bound by contracts?

Answer 6

In contracts for necessary goods/services (e.g. food/clothing)

In contracts for the service of the minor’s benefit (employment where they gain experience, apprenticeships)

Question 7

When will a contract be invalid if a party is mentally incapacitated?

Answer 7

The person was incapable of understanding the nature of the transaction

The other party knew that to be the case

Question 8

Can corporations be held liable of breach in a contract?

Answer 8

Yes, if they have separate legal personality. This includes:

Registered companies
Statutory corporations e.g. local authorities
Limited liability partnerships

Question 9

In the context of leisure and enjoyment, can a claim be made on behalf of a group?

Answer 9

Yes, the party to the contract can claim on the group’s behalf for distress and disappointment.

Question 10

What is implied actual authority?

Answer 10

Entering into contracts which is within the range of acts which would usually be carried out by the principal.