Ch.2 Formation and authority of agents, s.2: Authority of agents, Art.2.2.8

Author(s):  
Krebs Thomas

This commentary focuses on Article 2.2.8 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning sub-agency. In most countries, the default rule is that the agent is not permitted to delegate its authority. This rule is generally based on the confidential nature of the agency relationship. Art 2.2.8 stipulates that an agent has implied authority to appoint a sub-agent to perform acts which it is not reasonable to expect the agent to perform itself. This commentary discusses the requirements of sub-agency, the consequences of delegation of authority, cases where the sub-agent affects the legal relations of the third party, and burden of proof relating to sub-agency.

Author(s):  
Vogenauer Stefan

This commentary focuses on Article 5.2.4 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning defences of the promisor against the promisee and against the beneficiary. Art 5.2.4 stipulates that the promisor may assert against the beneficiary all defences which the promisor could assert against the promisee. The phrase ‘all defences’ has to be read as ‘all defences based on the contract from which the third party derives its right, but not those based on other relationships between the promisor and the promisee’. The promisor has to prove the existence of a defence against the promisee arising out of the contractual relationship which confers a right upon the beneficiary. The burden of proof is on the beneficiary if it wants to argue that the parties agreed not to make the promisor's defences available against the beneficiary.


Author(s):  
Vogenauer Stefan

This commentary focuses on Article 5.2.2 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning the attributes of the third party. The provision aims to strike a balance between commercial flexibility and legal certainty. Art 5.2.2 stipulates that the beneficiary must be identifiable with adequate certainty by the contract but need not be in existence at the time the contract is made. It furthers the autonomy of the original parties by allowing them to accord a right to future persons. A lack of identifiability affects the validity of the contract between the original parties. The burden of proof that the third party is identifiable with adequate certainty by the contract is on the party asserting that a contract in favour of a third party has been validly concluded, usually the beneficiary or the promisee. This commentary discusses the rationale of Article 5.2.2, existence and identity of the third party, and legal capacity of the third party.


Author(s):  
Krebs Thomas

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.


Author(s):  
Vogenauer Stefan

This commentary focuses on Article 5.2.3 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning a contract's exclusion and limitation clauses. According to Art 5.2.3, the conferment of rights in the beneficiary includes the right to invoke a clause in the contract which excludes or limits the liability of the beneficiary. There has to be express agreement of the parties to give the benefit of an exclusion or limitation clause to the beneficiary. This would be the case in the ordinary ‘Himalaya clause’, contained in bills of lading. The burden of proof is on the third party that invokes the clause excluding or limiting liability.


Author(s):  
Krebs Thomas

This commentary focuses on Article 2.2.9 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning ratification. Art 2.2.9 provides that an act by an agent that acts without authority or exceeds its authority may be ratified by the principal. On ratification the act produces the same effects as if it had initially been carried out with authority. The third party may, by notice to the principal, specify a reasonable period of time for ratification. If the principal does not ratify within that period of time it can no longer do so. This commentary discusses the prerequisites of ratification, the requirements for ratification, effects of ratification, and burden of proof relating to ratification.


Author(s):  
Krebs Thomas

This commentary focuses on Article 2.2.5 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning agents acting without, or exceeding their, authority. Art 2.2.5 stipulates that where an agent acts without authority or exceeds its authority, its acts do not affect the legal relations between the principal and the third party. However, where the principal causes the third party reasonably to believe that the agent has authority to act on behalf of the principal and that the agent is acting within the scope of that authority, the principal may not invoke against the third party the lack of authority of the agent. This commentary discusses apparent authority and its requirements and consequences, along with the burden of proof relating to apparent authority.


Author(s):  
Krebs Thomas

This commentary focuses on Article 2.2.3 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning disclosed agency. Art 2.2.3 stipulates that where an agent acts within the scope of its authority and the third party knew or ought to have known that the agent was acting as an agent, the acts of the agent shall directly affect the legal relations between the principal and the third party and no legal relation is created between the agent and the third party. However, the acts of the agent shall affect only the relations between the agent and the third party, where the agent with the consent of the principal undertakes to become the party to the contract. This commentary discusses the requirements of disclosed agency, the consequences of disclosed agency, and burden of proof relating to the requirements of disclosed agency.


Author(s):  
Krebs Thomas

This commentary focuses on Article 2.2.10 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning termination of an agent's authority. Art 2.2.10 stipulates that termination of authority is not effective in relation to the third party unless the third party knew or ought to have known of it. Notwithstanding the termination of its authority, an agent remains authorised to perform the acts that are necessary to prevent harm to the principal's interests. This commentary discusses the grounds for termination of authority, termination of apparent authority vs actual authority, authority of necessity, and burden of proof with respect to termination of authority.


Author(s):  
Krebs Thomas

This commentary focuses on Article 2.2.6 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning the liability of an agent acting without or exceeding its authority. Art 2.2.6 stipulates that an agent that acts without authority or exceeds its authority is, failing ratification by the principal, liable for damages that will place the third party in the same position as if the agent had acted with authority and not exceeded its authority. However, the agent is not liable if the third party knew or ought to have known that the agent had no authority or was exceeding its authority. This commentary discusses the extent of a false agent's liability, the third party's knowledge of agent's lack of authority, and the burden of proof required in this regard.


Author(s):  
Mikhail Leonidovich Osipov ◽  
Anastasiya Aleksandrovna Guseva

The subject of this article is relations that arise to interference of the third party (intervener) in contractual relations of the parties. The author considers the question of possible means of protecting a bona fide creditor from the actions of an intervener, such as challenging of the transaction consummated between the obligator and the intervener, as well as recovery of tort damages from the intervener for the benefit of a bona fide creditor. The article examines the issues emerging in the context of application of both methods of protection. The conclusion is made on the possibility of use of both methods, in preference to recovery of damages. It is noted that challenging of the transactions allows to equitably redistribute the burden of proof in disputes with a mala fide intervener, while the tort claim implies the possibility of recovering pure economic losses from a mala fide intervener. The authors indicate that the current Russian legislation does not contain dogmatic obstacles for application of such method of protecting a mala fide intervener.


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