LAW00720: Legal Rights, Contract and Agency Law Analysis

This law assignment solution addresses two key legal issues: privity of contract and agency law. The first part examines whether Roberta can benefit from a contract signed by Ada in Roberta's name. It analyzes the doctrine of privity of contract, referencing cases like Tweedle v. Atkinson and Coulls v. Bagot's Executor and Trustee Co Ltd, concluding that Roberta, not being a party to the contract, cannot directly enforce it. The second part explores the enforceability of contracts made by agents, focusing on undisclosed principals and agents exceeding their authority. It discusses the agent's liability, the principal's ability to ratify the contract, and the implications of an agent acting beyond their granted authority, citing cases such as Watteau v. Fenwick and Freeman and Lockyer v. Buckhurst Park Properties (Mangal) Ltd. The solution then addresses misrepresentation in contract law, analyzing the requirements for actionable misrepresentation and the available remedies, with reference to the Australian Consumer Law (ACL) and common law principles.

Question 1
A
As a general rule, only the parties to the contract are bound by the rights and obligations created
under such a contract. Therefore a contract created between A and B is not enforceable by C
even if such transaction was intended to benefit C. However, the strict application of this
doctrine is going to cause harsh results, especially when the contract is intended for the benefit of
a third party and a third party had relied upon it. As a result, in certain cases, acceptance or
alternative remedies were provided for avoiding or limiting such harsh results.
The doctrine related with the privity of contract has been recognized by the court in Tweedle v.
Atkinson (1861). The brief facts are that a promise was made by the father of the bride to the
father of the groom that he will pay the groom (plaintiff) a particular amount of money on their
marriage. However, before this statement can be made, the father of the bride died and was off
his estate refused to honor the comments made by him. The result was that the plaintiff (groom)
sued for the recovery of this money but his action failed. The reasoning adopted by the court was
that even if the contract was made for this benefit, he was not a party to this contract.
It is worth mentioning that the doctrine related with the privity of contract is applicable only in
case of the contractual rights and obligations (Balfour v Balfour, 1919). On the other hand if the
creating non-contractual rights and obligations, then it is possible to enforce these against or in
favor of the persons who are not the parties to such a contract.

However, in Trident General Insurance Co Ltd v McNiece Bros (1988), the high court has raised
doubts regarding the extent of this doctrine. It was mentioned by two judges that the doctrine
related with the privity of contract resulted in injustice where the third party is intended to derive
benefit from the contract, but are not allowed to enforce it directly. Therefore in this case, the
intended beneficiaries were allowed to get the benefit (Echeverry, 2015).
The issue is related with the privity of contract has been explored in Coulls v Bagot’s Executor
and Trustee Co Ltd (1967). In this case, it was held that the doctrine related with the previty of
contract is not allowed to third parties to enforce the promises made under the contract that are
beneficial for them (Eldridge, 2019). Therefore in this case, our company was given right by
Arthur Coulls to query stone from this property and in return he was going to receive royalty
payment. This contract has been signed by Arthur and his wife in their capacity as joint tenants.
However after the death of Arthur, it was found by the high court that his wife cannot be allowed
to receive the royalties as she was a third-party (Bell v Lever bros., 1932). The promise made by
the company was not expressly made to work. In this case, the boy was considered as a party to
the agreement and not to the contract.
In the present case also, Ada had entered into a contract with Qualstone Co. in Sri Lanka.
Although this contract was signed by Ada in Roberta's name but the contract has been formed for
the financial benefit of Ada. Now Roberta has come to know regarding the transition and she
wants to be the benefit of the contract. However, in view of the doctrine discussed above, it can
be stated that Roberta is not a party to the contract. Therefore she cannot be allowed to receive
the benefit under the contract.

B.
The issue in this part of the question is related with the enforceability of the contract that has
been created by an agent working for an undisclosed principal.
Under the law of contract, the terms undisclosed principal is mainly related with reliability of an
agent for the obligations that have been injured on behalf of principal. In case the agent has not
disclosed the nature of agency (the fact that he is acting as an agent of another person) , and
therefore fails to disclose the name of principal, in such a case the agent can be held personally
liable. On the other hand, if the agent has disclosed the name of principal, normally the agent is
not going to be held responsible for the commitments that have been undertaken within the scope
of agency. Sometimes a dummy buyer may have undisclosed principal (Fishman, 1987).
An undisclosed principal can be described as a person who has used an agent for the negotiations
with a third-party and generally in such cases, the agent pretends to be acting for him or her. The
result is that in such cases the third party is not aware of the real principal to whom they can look
to words in case of a dispute (Pentony. Graw, Lennard and Parker, 2014).
In case the principle is not disclosed at the time of the transaction, but later on the principle is
discovered, the third person may decide to hold such principal. The reason is that in such cases,
the principle is the real party in interest. However, it has been noticed that the agent may decide
to keep the principal undisclosed and by himself regarding the contract (Brick and Pipe
Industries Ltd v Occidental Life Nominees Pty Ltd., 1992). This can be done by the agent as he
is acting under instructions to that effect or due to the reason that the agent is careless in the
manner in which the agency is performed by him or due to some other reason he had decided to
bind himself to the contract (Schiff, 1983). Therefore in such a case, the agent will be personally

responsible to the third-party regarding the contract. However, after deciding the identity of the
principle, it is available to the third person, subject to certain exceptions, to decide to hold the
principle (Hely Hutchinson v Brayhead Ltd., 1968). This arises on account of the consideration
that the principal is a real party having interest in the transaction and the principle is identified in
the transaction, along with the agent and therefore it should be the right of the third person to
hold the principle as such (Dal Pont, 2008).
Generally, the principal who is involved in a particular agency transition is allowed by the law to
ratify the contract for providing 'actual authority' to the agent at the time of the transaction so
long as the agent had made it clear to the third person that he's going to enter the transaction on
behalf of principal. However, in context of the undisclosed principles regarding the undisclosed
agency, it has been argued that in such cases, the principle is not important in most of the
contractual transactions (Shavell, 1980). Moreover, the parties to the contract should not be
compelled for taking any items that are considered to be significantly different from the terms
that have been agreed upon. In this regard, the decision given in Watteau v. Fenwick provides a
significant example of this understanding related with the legal position when the agent has acted
contrary to the express instructions of the principal (Terry and Giugni, 2009).
Therefore it can be stated in this part of the questions that when the agent has suppressed the fact
that he or she is representing someone else in the transaction and is acting on the authority given
by another person as a part of the theory of undisclosed agency, and it is available to the third
person to either sue the agent or the undisclosed principal (Jerry, 2017).
In this part of the question, the issue is related with the enforceability of the contract that has
been created by an agent who was acting beyond the authority provided to him.

The law provides that the scope of authority conferred on the agent has to be decided by
interpreting the terms of the power of attorney (in terms of express authority) or the conduct of
the principal and other circumstances which revealed the intention of the principle to provide
authority to the agent (implied authority). Regardless of the fact if the grant of authority by the
principal to the agent was express or implied (Freeman and Lockyer v Buckhurst Park Properties
(Mangal) Ltd., 1964), the scope of authority provided to the agent extends to all the acts that are
reasonably necessary for achieving the purpose of principle for which the authority has been
granted to the agent unless clear indications are present regarding the fact that the principal had
the intention of granting only a limited authority (Oliver and Schoff, 2017).
Therefore the law provides that when the acts of the agent for beyond the authority provided to
the agent, such acts are not considered as binding for the principal and third-party. Therefore in
the present case, if Peter had asked Alan to purchase 200 ladies Society Brand dresses at of $60
per address and enters into a contract for purchasing addresses and $67 per address, it can be
stated that Alan had acted beyond the authority provided to him. Therefore, this contract created
by Alan is not binding for Peter.

QUESTION 2
After going through the facts of this question, the issue arises if Nicko can be allowed to set
aside a contract that he has formed with Top Publishing Company, through its sales
representative, Dan West.
Therefore in the present case it is worth mentioning that according to the common law,
misrepresentation overlaps with statutory provisions of the Australian Consumer Law (ACL)
concerning misleading conduct. Consequently, the general law provisions concerning
misrepresentation are relevant only when the provisions mentioned in Competition and
Consumer Act, 2010, to not apply or in context of non-commercial transactions. It has been
mentioned in the general law that actionable pre-contract misrepresentation is the one made by a
party when such party needs a false representation (Landes and Posner, 1987). Such
representation can be made orally or in writing. Similarly, it can be present through conduct or
the representation of fact. The result is that the statements concerning the opinion of law or the
productions concerning the future are not covered. In this context, it needs to be noted that such
statement should have been made by one contractual party to the other (van Schagen, 2017). The
other party is required to be induced by such statement to enter the transaction. In cases where
they can be established that the contract was caused on account of misrepresentation, the main
remedy of for that will be available to the other party is to rescind the contract. In this context it
is worth mentioning that generally the courts do not award damages in these cases unless the
misrepresentation is also a tort. In other words, such misrepresentation should be negligent or
fraudulent. In these cases, the court may award damages under the tort law but not in accordance
with the contract law. In the same way, even in cases where it is established that one party to the

contract made a misrepresentation, there are certain limits present on the right to rescind the
contract. For example, in cases where it is not possible to restore the parties to their original
position, I write will not be granted to rescind the contract.
For the purpose of establishing that one party has made a misrepresentation, the court will
consider the meaning of representation and will adopt an objective approach for this purpose.
Moreover, in such cases, the other requirements related with misrepresentation can be described
as follows. Therefore, there should be:
A statement related with a present or past fact;
The statement should be a positive misrepresentation; and
It is also required that the party should have relied on such misrepresentation.
In this way, it is required by the law that in order to get relief for the misrepresentation made by
a party to contract, it is necessary that the representation should be present in the form of a
statement that has been made in the context of a present or past circumstance. Hence, it is
possible that the statement would have been made by the party orally or in writing (ACCC v
Flight Centre Travel Group Ltd., 2016). The statement can also be implied on account of the
conduct of the party. As compared to the situation, generally, the courts do not provide relief in
cases where any other type of statement has been made like a statement of opinion or the
statements that can be described as mere puffs or the statements concerning the future intentions
or statements concerning the law.

Similarly, it also needs to be noted that in most of the cases, the courts will provide relief only
when their party has made a representation which turns out to be untrue. Therefore, the meaning
of the situation is that the courts are not going to provide relief in case of failure to disclose a
particular fact to the other party. However it should be mentioned that there are certain
exceptions present. For example, the exception is present in cases where our duty is present on
part of the other party to make the disclosure.
As stated above, regarding the pre-contractual misrepresentations, the is under the contract law
will be provided by the common law or the statutory remedies can also be availed by the other
party that have been provided by the Competition and Consumer Act, 2010. Earlier in place of
this legislation, the applicable legislation was known as the Trade Practices Act, 1974. But the
provisions of CCA are much more widespread and therefore they apply to avoid the
circumstances. Generally the opinion is that the CCA provides better remedies in case of
misrepresentation.
Now the aforementioned legal position has to be applied to the effects of the present case. At the
same time, the provisions related with unconscionable conduct should also be discussed. In this
regard, the unconscionable conduct is related with translations that have been concluded between
a dominant party and a weaker party. The result is that the unconscionable conduct provisions
overlap with the provisions concerning duress and undue influence. In the past, equity prohibited
unconscionable conduct. But in the recent times, statutory provisions have been introduced,
which prohibited unconscionable conduct. In this regard, equity provides that it would intervene
if an advantage has been taken by a party regarding the special disability suffered by the other

party. In this context, the nature of this ability can be lack of education, old age, illiteracy or the
combination of these factors. Similarly it is also required for this purpose that the transaction that
is created by unfunded conduct needs to be particularly harsh and oppressive. Hence, in cases
where it has been established that the transaction is the result of unconscionable conduct, the law
provides a choice to the weaker party to avoid the transaction. At the same time, unconscionable
conduct has also been riveted by the Australian Consumer Law (ACL). The relevant provisions
have been mentioned in Part 2, ACL.
However, the relevant provisions of ACL are also based on the equitable doctrine of
unconscionable conduct. However, these provisions widen the scope of remedies that can be
availed by the weaker party in case of unconscionable conduct of the other party.
It has been provided by the facts of this case that Nicko was a migrant worker. He had arrived in
Australia, only 10 months ago. Another effect that is relevant in this regard is that Nicko is not
capable of reading or writing English-language. However he can speak English and great
difficulty and also have problems in understanding it. Due to this reason, Nicko has to face a lot
of problems at his workplace. In order to deal with this issue, he decides to join an English
learning program. This program was being managed by the NSW government. One day, Nicko
meets the sales representative of Top Publishing Company, Dan West. During their conversation,
Dan tells Nicko that their company is publishing a monthly magazine that is very helpful for
learning English. Dan told Nicko that the quality of the magazine is so good that it is even used
by some English teachers are teaching the language in their classes. In reality, Dan was only
aware of what English teacher who had used this magazine in their classes.
Another statement made by Dan to Nicko, was that a large number of employers have also
recommended this may seem to their migrant employees. On the other hand, the reality was that

the statement was untrue. Another false statement made by Dan was that only a few
subscriptions were available and these are going to be given to the customers who have been
selected by Dan. Under the circumstances and relying on the statements made by Dan, Nicko
decides to enter into a contract with Top Publishing Company through Dan for the subscription
of the magazine.
When Nicko became ready to enter into a contract for the subscription of the magazine, Dan
gave a contract to Nicko. This contract was then pages in length, and it had nearly 90 clauses. In
this contract, there was a clause which provided that the subscriber was going to agree to pay an
additional fee for purchasing binders for the copies of this magazine every year. However, Dan
failed to bring this clause to the notice of Nicko. Nicko also told Dan that he was not very
proficient in English language and as a result, he was not able to ascertained the meaning of most
of the clauses present in the contract. Secretly, Nicko told Dan that it would be better if we took
the help of his solicitor friend in understanding the causes of the contract. However, Dan
informed Nicko that the contract did not carry any significant clause. Moreover, if Nicko did not
sign the contract immediately, he will not be able to get this subscription for the magazine by the
next day. In view of the circumstances, Nicko decided to enter the contract.
In view of the circumstances and also the legal position discussed above, it can be concluded in
this case that Nicko was in use by the false statements made by Dan to enter into the contract
with Top Publishing Company. Result, it can be stated that this contract is hit by unconscionable
conduct and therefore the law allows Nicko to avoid the contract.

References
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Jerry I-H., 2017. “Smart” Contract On The Blockchain-Paradigm Shift For Contract Law?. US-
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