Ch.2 Formation and authority of agents, s.2: Authority of agents, Art.2.2.7
This commentary focuses on Article 2.2.7 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning conflict of interests. Art 2.2.7 stipulates that if a contract concluded by an agent involves the agent in a conflict of interests with the principal of which the third party knew or ought to have known, the principal may avoid the contract. However, the principal may not avoid the contract if the principal had consented to, or knew or ought to have known of, the agent's involvement in the conflict of interests; or if the agent had disclosed the conflict of interests to the principal and the latter had not objected within a reasonable time. It is for the principal to show both the existence of the conflict of interests and that the third parry knew or ought to have known about it. Once the principal has discharged that burden of proof, it is then for the third party to establish that the principal consented to, knew of, or ought to have known of the conflict.