Legal Studies: Privity of Contract, Undisclosed Principal, Misrepresentation, Undue Influence, and Unconscionable Conduct

Legal Studies
Running Head: COMMERCIAL LAW 0
9 / 2 0 / 2 0 1 9
Student’s Name

1
Question 1
Part A
Issue
The issue is to advise Roberta regarding his legal rights in the given situation.
Rule
A contact is an agreement that can bind the parties and provide rights and obligations to
them in respect to each other. Here this is to state that parties to the contract have
these rights and obligations and they cannot confer the same upon any other person
under the doctrine of privity of contract. The case titled Beswick v Beswick [1968] AC 58
is significant in the area of privity of contract. The court provided that no person can
enforce the benefit under a contract in which such person in which a person is not a
party (Webstroke.co.uk, 2019). It means only a party of the contract can sue or can be
sued by others under a contract and not a third party. The doctrine of privity of the
contract further states the third party cannot enforce that contract developed between
two people even when the contract has intention to give advantage to a third party
(Australiancontractlaw.com, 2019).
Some exceptions of doctrine of privity of contract are also there. These exceptions are
the situations where a third party may get the benefit out of a contract even when the
same was not a party of the contract. Agency seems to be an exception to the
subjective doctrine where most of the dealing happens between agent and third party.
Due to the complexity of commercial transactions, it is general for the parties to conduct
commercial transactions with the help of their agent. Agency is a relationship where the
agent gets right to do the transactions with outsiders on behalf of the principal. Here

2
principal can be held liable by third party and can also make the same liable even not
being a party of contract in actual. However, when an agent conducts any activity on
behalf of the principal he/she refer the name of principal and principal can be treated as
a party to the contract. An agency relationship can be developed by giving various kind
of authority. The very first kind of authority is an actual authority, which has further two
type. The one is express authority where the principal grants power to an agent in real.
Another kind of authority is implied authority. Such kind of authority exists because of
express authority. As per the decision of Australia and New Zealand Bank v Ateliers de
Constructions Electriques de Charleroi (1966) 39 ALJR 414 an implied authority can be
understood necessary to be there to fulfill the obligations under express authority. If an
agent holds a particular type of position or relations with the principal, the third party
may assume implied authority due to such position or relation. The last kind of authority
is known as an ostensible authority. Ostensible authority is the one where principal by
his/her action represents a person as an agent.
Application
In the case given hereby, Ada and Roberta were friends with each other. They both
were engaged in the business of jewelry business. The issue of the case started when
Ada developed a contract with the third party named Qualstone Co. in the name of
Roberta. According to the provisions of the doctrine of Privity of contract, parties to the
case were Roberta and Qualstone Co. and had right and obligation to each other. Ada
had no rights or obligation under this contract even when the contract was intended to
provide benefit to her. Moving the focus towards exception to the respective doctrine,
this is to state that exception of agency does not seem to be applicable here because
no such relationship existed between Roberta and Ada. No actual authority was there

3
between them. Further, Ada did not ask permission before entering this contract.
Roberta had not made any representation and therefore an ostensible authority was
also not there. Lastly, as mentioned in the given case, no business connection was
there between Roberta and Ada hence an implied authority can also not assumed to be
there. Since no authority was there it is proved that Ada was a third party for the
contract developed by her with Qualstone Co. in the name of Roberta.
Conclusion
As Roberta is a party to the contract therefore may ask the benefit out of the same.
Part B
Issue
The issue of the case is to identify the rights of Peter in against of Alan as well as
Toselli warehouse? What rights Alan would have if the purchase price of dresses
brought by Alan was $67 per dress.
Rules
In general, the outsider dealing with the agent knows the fact that the person is acting
as an agent on behalf of the principal but the situations are different sometimes. At
many incidents, the existence, or identity of the principal remains hidden from the third
party. In these situations, the third party thinks that a person is not an agent, which is
not true. A principal whose identity remains hide is known as an undisclosed principal.
Entitlement and obligations of parties are different in case of undisclosed principals. As
per the provisions of agency law, a third party and principal has right to each other even
in such cases, as it is an exception to the doctrine of privity of contract (Trigunayat,
2017). This seems to be an exception because, in such a situation, the name of the
principal used to mention nowhere yet he/she can sue the third party or agent and can