1. Contract II Today looking at Contract II
Concepts not complicated but there is a lot of vocabulary.

2. Privity of contract
To begin, lets discuss POC

3. Privity of contract
The simple rule is that a person who is not a party to a contract can neither sue nor be sued under it.
However, under the Contracts Act 1999, third parties can now enforce provisions in a contract if:
the contract expressly states this or
the contract purports to confer a benefit on the third party
The simple rule is that a person who is not a party to a contract can neither sue nor be sued under it. This is a basic principle of contract law.
However it can create unfair situations. So
However, under the Contracts Act 1999, third parties can now enforce provisions in a contract if
the contract expressly states this or
the contract purports to (appears to) confer a benefit on the third party

4. Agency An agent acts on behalf of his principal
A contract entered into by an authorised agent will bind the principal.
There are also some other established exceptions to the doctrine of privity.
The first of these is Agency
An agent acts on behalf of his principal
A contract entered into by an authorised agent will bind the principal.
(eg a salesman is authorised to enter into sales contracts on behalf of his company)
if the agent has:
express authority clear and explicit authority for a particular contract
implied authority general authority to enter into contracts necessary to carry out the principal’s instructions
apparent authority P’s words or conduct lead a third party to conclude that A has authority to act on his behalf.
to contract in P’s name

5. Assignment
It is possible to assign (=transfer) rights (= a benefit) under a contract
Obligations to a third party cannot be transferred unless he consents.
Novation: occurs when a new contract is substituted for an existing contract.
The second exception is assignment.
This is when one of the parties is replaced by someone else
It is possible to assign (=transfer) rights (= a benefit) under a contract
Obligations to a third party cannot be transferred unless he consents.
Novation: occurs when a new contract is substituted for an existing contract, usually when one party transfers all his rights and obligations to a third party.
English law provides that the benefit of a commercial contract is prima facie assignable, whereas the burden cannot be assigned freely. The seller will remain liable to perform any obligations which still have to be fulfilled under the contract.
Lord Browne-Wilkinson stated definitively that the burden of a contract may never be assigned. He said: "It is trite law that it is, in any event, impossible to assign "the contract" as a whole, i.e. including both burden and benefit. The burden of a contract can never be assigned without the consent of the other party to the contract in which event such consent will give rise to a novation."

6. Agency? Assignment? Novation?
John owes Big Company £1,000. Big Company sells the right to recover this debt to DebtsRUs. DebtRUs now has the right to pursue John for payment.
Shiny windows has a contract to install all the windows in Big Company's new offices. They have too much work, and so ask Brilliant windows to do the work instead. Big Company agrees to this.
Margaret is the Sales Director for Techmech. She signs a contract with Philip, a local businesssman, to install Techmech's new account installation software.

7. Terms

8. Express v. implied terms
Express terms: explicitly agreed upon by the parties
Implied terms: terms implied into a contract, based on
the parties’ presumed intentions or
the law e.g. the Sale of Goods Act (1979)
There are two types of terms

9. Terms v. (mere) representations
statements made during negotiations which may have induced a party to sign the contract
do not form part of the contract
Terms
are binding
The most important distinction is the distinction between terms and representations (often called mere representations = simple)
Representations
statements made during negotiations which may have induced a party to sign the contract
do not form part of the contract
Terms
are binding

10. Terms v. (mere) representations
When deciding if a statement made during negotiations is a term, the court considers:
its importance to the parties
the respective knowledge of the parties
the manner in which the statement is made
whether it is written into the contract
When a car is being sold – made by a member of the public selling his car to a garage, likley to be a representation. The inverse, more likely to be a term – garage owner is a professional and has expert knowledge, member of public thinks he can trust what he says.
Manner – is it made with absolute certainty, or with hesitation
Written – normally written in, but may be partly written and partly oral
DO MORE ON THIS NEXT TIME - MISREPRESENTATION