International Contract Law.
Mr. Marco Tupponi
Studio Associato
Avv. Marco Tupponi
Dott. Giuseppe De Marinis
& Partners
Via Maceri n.25 - 47100 Forlì
Tel +39 0543 33006 - Fax +39 0543 21999
www.tupponi-demarinis.it
www.commercioestero.net
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Common law
The common law forms a major part of the law of many nations,
especially those with a history as British territories or colonies. It is notable
for its inclusion of extensive non-statutory law reflecting precedent derived
from centuries of judgments by judges hearing real cases.
The opposition between civil law and common law legal systems has
become increasingly blurred, with the growing importance of jurisprudence
(almost like case law but in name) in civil law countries, and the growing
importance of statute law and codes in common law countries (for example,
in matters of criminal law, commercial law (the Uniform Commercal Code in
the early 1960's) and procedure (the Federal Rules of Evidence in the
1970's)).
Scotland is often said to use the civil law system but in fact it has a unique
system which combines elements of an uncodified civil law dating back to
the Corpus Juris Civilis with an element of common law long predating the
Treaty of Union with England in 1707
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Civil law (legal system)
Civil law is system of law that has its origins in Roman law and sets out a
comprehensive system of rules, usually codified, that are applied and
interpreted by judges. However, modern systems are descendants of the
19th century codification movement, during which the most important
codes (most prominently the Napoleonic Code and the BGB) came into
existence. The civilian system is by and large the most widely practiced
system of law in the world. As discussed in detail below, the civil law
systems of Scotland and South Africa are uncodified, and the civil law
systems of Scandinavian countries remain largely uncodified.
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…continue
Thus, the difference between civil law and common law lies less in the
mere fact of codification, but in the methodological approach to codes
and statutes. In civil law countries, legislation is seen as the primary
source of law. By default, courts thus base their judgments on the
provisions of codes and statutes, from which solutions in particular
cases are to be derived. Courts thus have to reason extensively on the
basis of general rules and principles of the code, often drawing
analogies from statutory provisions to fill lacunae and to achieve
coherence. By contrast, in the common law system, cases are the
primary source of law, while statutes are only seen as incursions into
the common law and thus interpreted narrowly.
There are, however, certain sociological differences. Civil law judges are
usually trained and promoted separately from advocates, whereas common
law judges are usually selected from accomplished and reputable
advocates. Also, the influence of articles by legal academics on case law
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tends to be much greater in civil law countries
Commercial law
Commercial law or business law is the body of law which governs
business and commerce and is often considered to be a branch of
civil law and deals both with issues of private law and public law.
Commercial law regulates corporate contracts, hiring practices, and
the manufacture and sales of consumer goods.
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What are the Sources
of Contract Law ?

Common law : judge-made law, as distinguished
from laws passed by legislature

Uniform Commercial Code (UCC) : model code
on commercial transactions adopted by all states
(except Louisiana)

Civil or Commercial Code, or specific law in Civil
Law
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International Commercial Law
The Myth of Transnational
Commercial Law
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International Contracts and the Myth of
a Transnational Contract Law
International Contracts: How do they differ
from domestic contracts?
 Drafting is in legalese – English jargon
handed down from contract to contract
 References to non national sets of rules –
INCOTERMS, UNIDROIT, UCP 600 etc.
 Is there a transnational commercial law
based on English law?

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The Style of International
Contracts
International contracts are written in
English
 International contracts are lengthy and
regulate all thinkable aspects:

Gender/Singular and Plural
 Representations and Warranties
 Notices
 Amendments
 Etc.

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Possible Implications of the
Contract Style
Parties may assume that all aspects of
transactions are regulated by the contract
 Parties may assume that the contract is
the only regulation
 Parties may rely on transnational
commercial law
 Parties may draft the contract irrespective
of the governing law (chosen at the end)

11
Firm Offer and National Law

Romanistic systems of law - Art. 1329 Italian
Civil Code: Firm offer is binding. Revocation is
ineffective

Germanic systems of law - § 145 German BGB:
Firm offer is binding. Revocation is ineffective

Common Law systems


USA: Promissory estoppel (irrevocable to the extent
it has induced offeree’s action)
UK: Revocable if there is no consideration
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Contracts can have many names









Contract
Agreement
Purchase Order
Memorandum of Understanding
Terms and Conditions
Appointment Letter
Handbook (“implied contract”)
License
Ticket
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Or no name at all…
a letter…
 a telephone call…
 an e-mail…

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Contract:
“[a]n agreement between two or more persons
which creates an obligation to do or not do a
particular thing… A legal relationship consisting
of the rights and promises constituting an
agreement between the parties that gives each
a legal duty to the other and also the right to
seek a remedy for the breach of those duties.”
[Black’s Law Dictionary, 6th ed.]
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In other words …
A contract is a legally
enforceable promise
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Title II: Contracts in General.
Item I: Introductory Provisions.
1321 c.c. Ita. Concept.
A contract is the agreement between two or more
parties
to establish, regulate or extinguish a patrimonial legal
relationship among themselves.
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1322 c.c. ita Freedom of Contract. –
The parties may freely set out the content of a contract,
as long as it is in accordance with the law and
corporative regulations.
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Types of Contracts
(or Agreements)
Bilateral
vs. Unilateral
Executory
vs.
Valid

Unenforceable
Express
vs. Implied
vs. Executed
vs. Voidable
vs.
Void
Bilateral and Unilateral Contracts
Bilateral: both parties make a
promise.
 Unilateral: one party makes a
promise that the other party can
accept only by doing something

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Types of Contracts

Express and Implied Contracts
 Express: the two parties explicitly state all
important terms of their agreement.
 Implied: the words and conduct indicate
that the parties intended an agreement.

Executory and Executed Contracts
 Executory: when one or more parties has
not fulfilled its obligations.
 Executed: when all parties have fulfilled
their obligations.
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Types of Contracts

Valid, Unenforceable, Voidable, and
Void Agreements
Valid: satisfies the law’s requirements.
 Unenforceable: when the parties intend to
form a valid bargain but some rule of law
prevents enforcement.
 Voidable: when the law permits one party
to terminate the agreement.
 Void: one that neither party can enforce,
usually because the purpose is illegal or
one of the parties had no legal authority.

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1337 c.c. Ita. Talks and Pre-Contractual Liability. –
During the negotiations process and the formation of contract
the parties must act in good faith.
1340 c.c. Ita. Clauses of Use. –
The clauses of use are deducted as included in the contract,
if does not come out that they were not wanted by the parties.
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Item II: Requirements of Contract.
1325 c.c. ita Guidelines for Requirements.
The requirements of a contract are:
1. the agreement between the parties;
2. the cause for the contract;
3. the subject-matter of the contract;
4. the form of the contract, as far as is prescribed
by the law under penalty of invalidity.
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Elements of a Contract

Agreement
offer, and
 acceptance


Consideration


Legality


There has to be bargaining that leads to
an exchange between the parties.
The contract must be for a lawful purpose.
Capacity

The parties must be adults of sound mind.
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Meeting of the Minds


The parties can form a contract only if they had a
meeting of the minds.
 They must understand each other and intend to
reach an agreement.
 A judge will make an objective assessment of
any disagreements about whether a contract
was made -- whether or not a reasonable
person would conclude that there was an
agreement, based on the parties’ conduct.
Objective Theory of Contract: Lucy v. Zehmer
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Negotiation Terms
JOE
Offer
Accept or
Reject or
Counteroffer
BOB
Accept or
Reject or
Counteroffer
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Section I: Agreement Among The Parties.
1326 c.c. ita Contract Conclusion. –
A contract is concluded when the proponent party is informed
about the other parties’ acceptance.
The acceptance must arrive within the term established by the proponent,
or (within) the term necessary as a rule depending on the nature
of business, or according to uses.
The proponent may consider effective a belated acceptance as long as
he promptly forewarns the other party.
If the proponent asks for a particular fo
rm of contract, acceptance by
the other parties has no effect if it is given in another form.
An acceptance which does not conform to the proposition
is equivalent to a new proposition.
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What are the
Elements of a Contract?
In Common Law
 Offer
 Acceptance
 Consideration
 Mutuality
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Offer:

A proposal to do a thing or pay an amount,
usually accompanied by an expected
acceptance, counter-offer, return promise
or act

The offeror is the “master of his offer”.
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Offer
An offer is an act or statement that proposes
definite terms and permits the other party to
create a contract by accepting those terms.


Problems with Intent
 Invitation to bargain is not an offer.
 Price quote is generally not an offer.
 An advertisement is generally not an offer.
 Placing an item up for auction is not an offer, it
is merely a request for an offer.
Problems with Definiteness
 The term of the offer must be definite.
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Termination of Offers


Termination by Revocation
 Effective when the offeree receives it.
Firm Offers and Revocability
 Common Law Rule
 Revocation of a firm offer is effective if the
offeree receives it before he accepts.
 Option Contract
 The offeror may not revoke an offer during the
option period.
 Sale of Goods
 A writing signed by a merchant, offering to hold
an offer open, may not be revoked.
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Termination of Offers


Termination by Rejection
 If an offeree rejects an offer, the rejection
immediately terminates the offer. A counteroffer
operates as a rejection.
Termination by Expiration
 When an offer specifies a time limit for
acceptance, that period if binding.
 If the offer specified no time limit, the offeree
has a reasonable period in which to accept.
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Irrevocable offer
”This offer is binding on the Offeror and
cannot be revoked before 30 days have
elapsed from the date hereof”

May the offer be revoked within the 30
days term?
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Acceptance:
Compliance by the offeree with terms and
conditions of an offer
 A manifestation of assent to terms of offer
in a manner invited or required by the offer
 The offer and acceptance must match
(“mutuality” …more on this soon…)

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Acceptance:
Does not necessarily occur only by
signature of a contract
Acceptance can occur by:

Action -using goods
-opening the package (software)
-entering an establishment or participating in
an activity

Inaction –not returning goods
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Acceptance:
Sometimes acceptance does not appear
“voluntary,” but it is still sufficient
Contracts of Adhesion:
-- “Take it or leave it” terms
-- Not bargained for
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Acceptance

The offeree must say or do something
to accept.
In a bilateral contract, the offeree generally
must accept by making a promise.
 In a unilateral contract, the offeree must
accept by performing.


Mirror Image Rule (Common Law)
Requires that acceptance be on precisely
the same terms as the offer.
 Normile v. Miller

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Communication of Acceptance



Wucherpfennig v. Dooley
and Manner of Acceptance
 If an offer demands acceptance in a particular
medium or manner, the offeree must follow
those requirements.
 If the offer does not specify a type of
acceptance, the offeree may accept in any
reasonable manner and medium.
Time of Acceptance: The Mailbox Rule
 An accceptance is generally effective upon
dispatch, meaning the moment it is out of the
offeree’s control.
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Consideration:

Something of legal value; anything that
induces you to give up something

May be something other than money
(i.e., a promise to do something;
a promise to refrain from doing
something)
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Consideration

Bargaining that leads to an exchange
of value between the parties.

Consideration can be anything that
someone might want to bargain for. It
is the inducement to make the deal, or
the thing that is bargained-for.

McInerny v. Charter Golf
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A Bargain and an Exchange
“Bargaining is obligating yourself in
order to induce the other side to
agree.”

The thing bargained for can be:
another promise or action.
 a benefit to the promisor or a detriment to
the promisee.
 a promise to do something or a promise to
refrain from doing something.

41
Mutuality:

A “meeting of the minds” with respect to
material contract terms

A signature is deemed to be sufficient to
evidence this requirement

Therefore, it is crucial that you read carefully
and understand all of the terms of a contract
before you sign it
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Mutuality of Obligations

Illusory Promise


If one party’s promise is conditional, the other party
is not bound to the agreement.
Promise to pay in return for past favors.

Passante v. McWilliam
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Contract Clauses to Include (cont.)

Liability Protections
Defense & Indemnification
 Insurance

Termination
 Dispute Resolution

Litigation; Arbitration; Mediation
 Governing Law
 Forum – What court? Where?

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Amendments to a contract
” The parties hereby agree to modify clause XX
of the contract entered into by and between the
parties hereto on [date] for the sale of YY
(hereinafter the ”Contract”), so that the price to
be paid by the Buyer shall be ZZ instead of WW.
All other terms and conditions of the Contract
remain unchanged and continue to be fully valid
and binding on the parties.”

Is the amendment valid?
45
Amendments to a Contract and
National Law

Romanistic systems: amendment is valid

Germanic systems: amendment is valid

Common law systems: amendment is valid
only if there is consideration
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Choice of law clause
A choice of law clause or proper law clause in a contract is one in
which the parties specify which law (i.e. the law of which state or nation if
it only has a single legal system) will be applied to resolve any disputes
arising under the contract.
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Lex fori
In Conflict of Laws, the Latin term lex fori literally means the "law of the
forum" and it is distinguished from the lex causae which is the law the forum
actually applies to resolve the particular case.
Forum shopping
Forum shopping is the informal name given to the practice adopted by
some plaintiffs to get their legal case heard in the court thought most likely
to provide a favourable judgment, or by some defendants who seek to have
the case moved to a different court
Forum selection clause
A forum selection clause in a contract with a Conflict of Laws element
allows the parties to agree that any litigation resulting from that contract will
be initiated in a specific forum.
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Arbitration
Arbitration is a legal technique for the resolution of disputes outside the
courts, wherein the parties to a dispute refer it to one or more persons
(the "arbitrators" or "arbitral tribunal"), by whose decision (the "award")
they agree to be bound. In the United States, the term is also used to
refer to non-binding arbitration, a process in which the final award does
not bind the parties.
Arbitration is today most commonly used for the resolution of commercial
disputes, particularly in the context of international commercial
transactions. It is also used in some countries to resolve other types of
disputes, such as labour disputes, consumer disputes or family disputes,
and for the resolution of certain disputes between states and between
investors and states.
49
What form must a contract
take to be a legally
enforceable?
50
Does an agreement between two or
more parties have to be in writing in
order to be enforceable in a court of law?
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A Contract Can Be Written or Oral
in USA

Certain contracts must be in writing:
Contracts for the sale of goods over $500
 Contracts for the sale of real property
 Contracts that are incapable of being
performed within 1 year
 Promises to answer for or discharge the debts
of another (Guarantee)

52
Written and Oral Contract Terms
(cont.)
Evidence questions become crucial if
there is a contract dispute
A contract is only as good as what you
can later prove to be the terms of the
contract
53
1341 c.c. Ita. General Terms of Contract. –
The general terms of contract are arranged by one
of the contracting parties.
They are effective to the other contracting party if at the time
of formation of contract the other contracting party was or
should have been aware of them, according to ordinary diligence.
In any case they have no effect unless the following terms
are specifically approved in writing:
the limitation of liability, the right of rescission, and the
performance of contract suspension, that is to say they rule
forfeitures in charge of the other contracting party, limits to the right of
objecting exceptions, restrictions to the freedom of contract with
third parties,deferment or renewal of contract,
arbitration clause or ouster of jurisdiction
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What is “boilerplate” in a
contract?
Is it different from “legalese”?
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Is it necessary to read and
negotiate “boilerplate” or
“legalese”?
…
the 70-page Confidentiality Agreement
that was all “just boilerplate”…
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Battle of the Forms

Modern business transactions are often
conducted primarily through forms
Example: Bob decides to buy a computer


Purchasing sends a purchase order to the vendor
containing standard terms and conditions that are
favorable to Bob
After receiving the order, vendor sends a written
acceptance or confirmation of the order on its form
which contains the basic contract terms and a series
of pre-printed terms that are favorable to the vendor
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This is where the Battle Begins…

If there is a contract dispute, which form will
prevail?

Common law: the acceptance must mirror the precise
terms of the offer and any variance from that
constitutes a rejection of the offer or a counteroffer

UCC: says that, on premise that both parties
recognize a contract despite their clashing forms, a
contract is formed, unless the vendor specifically
states that there shall be no contract unless his set of
terms is accepted by the original offeror
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…continues

If: the offeree’s (vendor) response contains
terms additional to those contained in Bob’s
original offer (purchase order)

Then: a contract exists consisting of the terms
on which the offer and acceptance agree

The additional terms are merely a proposal for
additions to the contract
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…and ends

If: the offeree’s response contains terms which
are inconsistent with the original offer

Then: the court looks at the parties’ conduct to
determine whether they acted as though a
contract was formed

If so, the conflicting terms cancel each other out and
necessary terms are provided by the UCC or custom.
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Section IV: Procedures of Contract
1351 c.c. Ita. Pre-Contract. –
The pre-contract is null and void unless it respects
the same form prescribed by the law
for the final contract.
61
Is a “Memorandum of Understanding” a
contract?
62
Is a “Letter of Intent” a contract?
63
What is apparent authority?
64
Who May Sign A Contract?

Only those individuals who have been
expressly delegated signature authority or
management

Unauthorized individuals who sign contracts
expose themselves to possible personal
liability
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Challenges,
Problems
&
Pitfalls
66
Potential Contract Pitfalls

Not reading and understanding the
contract

Not negotiating and documenting the
contract’s terms
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Potential Contract Pitfalls

Disclaimers or limitations on the other party’s
performance; disclaimers of warranties, etc.

Any clause permitting the other party to change
contract terms without the permission in writing

Failure to specify all terms, documents, etc. that
are included in the contract or failure to show
acceptance (i.e., signing or initialing changes)
68
Potential Contract Pitfalls (cont.)

Reference to terms

Indemnification, Liability Releases, Limits
on Other Party’s Liability
69
Potential Contract Pitfalls (cont.)

Termination of Contract
Excessive opportunity for the other party to
cure its breaches of the contract
 Excessive or unreasonable penalties imposed
for terminating the contract


Dispute Resolution in distant locations
(other party’s home city and state) and
under laws of a distant state (other party’s
home state)
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What if a contract is
breached?
71
Section II: Penal Clause and Deposit
1382 c.c. Ita. Effects of Penal Clause. –
The clause, which lays down that in case of non-fulfilment or belated
fulfilment of thecontract one of the contracting parties is due to supply
a certain consideration, produce the effect of reducing the compensation
to the consideration promised, if a further damage has not been agreed.
1385 c.c. Ita. Confirmation Deposit. –
When a contract is formed, if one party gives to another a certain amount
or quantity of fungible things as a deposit, this must be returned or imputed
to the consideration due in case of fulfilment.
If the party who gives the deposit defaults, the other may back out
of the contract holding the deposit back; if the defaulting party is the one
who receives the deposit, the other may back out of the contract and
collect double the deposit.
Alternatively, if the fulfiller party wishes to exact the consideration or the
rescission of contract, the compensation is regulated by the general terms.72
Remedies for Breach of a Contract

Money Damages

Compensatory: actual or real damages; compensate
for the injury sustained and nothing more
(“benefit of the bargain”)

Punitive: damages to punish the defendant or set an
example for similar wrongdoers

Nominal: token amount of money because of
technical wrong but no actual damages
73
What are liquidated damages?
74
Remedies

Money Damages (cont.)

Consequential: damage, loss or injury that
doesn’t flow directly and immediately from the
act, but only from some of the consequences
or results of such act

Liquidated: specific sum of money expressly
stipulated by the parties in the contract to
cover damages
75
Remedies

Specific Performance

Money damages aren’t adequate to give the
plaintiff the “benefit of the bargain”
 Remedy
used if the item is unique, such as a piece
of property or artwork

So, the defaulting party is required to perform
its obligations under the contract
76
Item XIV: Resolution of Contract.
Section I: Resolution by Reason of Breach.
1453 c.c. Ita. Resolution of Contract by Reason of Breach. –
Contracts which provide for fair and valuable considerations enable
the fulfiller contracting party to exact the defaulting party
the performance, or the resolution, of the contract,
unless in any case a compensation.
The resolution may be exacted even when the action
has been promoted in order to get the fulfilment but not vice versa.
The defaulting party cannot fulfil its obligation once the date
of the resolution claim has been communicated
77
1456 c.c. Ita. Explicit Resolutive Clause. –
The parties may explicitly agree that the contract
is to be rescinded if a particular obligation is not fulfilled
according to the agreed procedures.
In this case the rescission is determined by right when
the party concerned declares to the other
its intention to make use of the avoidance clause.
78
Section II: Supervening Impossibility i.e. Force Majeure
1463 c.c. Ita. Complete Impossibility. –
In contracts which provide for fair and
valuable considerations, the party freed on account
of the supervening impossibility of the due performance
cannot exact the action for money had and received.
79
Force Majeure
”The usual Force Majeure clauses to
apply”
Does governing law provide with force
majeure regime?
 Does governing law not provide with force
majeure regime?

80
Definition of Force Majeure and
National Law

Romanistic systems: Art. 1218, 1463 Italian Civil
Code

Germanic systems: § 275 German BGB

Common Law: Clause is void for uncertainty –
force majeure is not a legal term under English
law. Contractual obligations are absolute;
exception: frustration
81
Partial Impediment
”Non performance by a party of its
obligations hereunder is excused if such
party was prevented from fulfilling its
obligations by an event beyond that party’s
control, that was not foreseen at the date
hereof and that could not be reasonably
avoided or overcome.”
82
Partial Impediment and National
Law

Romanistic systems: Art. 1464 Italian Civil Code:
Partial Excuse

Germanic systems: § 275 German BGB

Common Law: Frustration kills the contract.
Partial frustration does not exist
83
Section III: Hardship Clause.
1467. Contracts With Performance Considerations. –
In continuing contracts, that is to say in future contracts,
if the consideration of one of the parties has become exceedingly
onerous because of exceptional and unforeseeable events, the party
who owes such consideration may exact the rescission
of the contract, bex art.1458.
The rescission cannot be exacted if the supervening unconscionability
is part of the risk in the contract.
The party asked to rescind the contract may propose
a fair alteration of the contract.
84
Item V: Effects of Contract
Section I: General Provisions
1376 c.c. Ita. Contract With Real Effects. –
If the subject-matter of a contract is the transfer
of property of a particular thing, the constitution or
the transfer of interest, that is to say
the transfer of another interest, property or interest
are transferred and acquired if the parties lawfully agree.
85
Rome Convention (contract)
In Conflict of Laws, the Rome Convention is the Convention on the Law
Applicable to Contractual Obligations and it opened for signature in
Rome on 19th June 1980.
NOW this Convention is substitued from the Reg. n. 593/17 june 2008
The intention is to create at least a harmonised if not a unified body of
law within the European Union.
86
Express selection
Article 3 states the general rule that the parties to a contract have
freedom of choice over the Applicable Law. To exercise this choice
either express words may be used or the intention should be
demonstrated with reasonable certainty by the terms of the contract or
the circumstances of the case. The law chosen may apply to the whole
or only a part of the contract, and the choice is not irrevocable. The
parties can at any time agree to change the Applicable Law and any
such variation will not prejudice the formal validity of the agreement
nor adversely affect the rights of third parties. But, although the parties
do not need to match the Applicable Law and the forum given
jurisdiction, the choice of law cannot be used to evade the mandatory
provisions of the state most closely connected with the agreement.
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Implied selection
If there is no express choice, Article 4 provides that the contract shall be
governed by the law of the country with which it is most closely connected.
If the agreement is severable, two Applicable Laws may be selected. For
these purposes, it is presumed that the contract is most closely connected
with the lex loci solutionis, i.e. the law of the place where the contract is to
be performed, or the law of the habitual residence of the person who is to
perform, or, in the case of a body corporate or unincorporate, where its
central administration is located.
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…continue
However, if it is a commercial or professional contract, the Applicable Law
will be the law of the place in which the principal place of business is
situated or, where under the terms of the contract the performance is to be
effected through a place of business other than the principal place of
business, the country in which that other place of business is situated
except that there is a rebuttable presumption:
where the subject matter of the agreement is immovable property, the lex
situs will apply; and
contracts for the carriage of goods and charter-parties are governed by the
law of the place in which, at the time the contract is concluded, the carrier
has his principal place of business if that is also the place in which loading
or discharge is to occur or the place where the consignor has his or her
principal place of business,.
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Agency (law)
Agency is an area of Commercial law dealing with a contractual or quasicontractual tripartite set of relationships when an Agent is authorised to act
on behalf of another (called the Principal) to create a legal relationship
with a Third Party.
This branch of law separates and regulates the relationships between:
Agents and Principals
Agents and the Third Parties with whom they deal on their Principals'
behalf;
Principals and the Third Parties when the Agents purport to deal on their
behalf.
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The concepts
The reciprocal rights and liabilities of Principal and Agent reflect commercial needs
and legal realities. In any business of size, it is not possible for one person to travel
everywhere to negotiate all the transactions necessary to maintain or grow the
business.
These problems are increased if the business is a corporation, because it is then
a fictitious legal person and, as such, it can only act through human agents.
Hence, independent people are contracted by businesses to buy and sell goods
and services on behalf of those businesses.
When agreements are made, the Principal is liable under the contract(s) made by
the Agent. So long as the Agent has done what he or she was instructed to do,
the result is the same as if the Principal had done it directly.
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Brief statement of legal principles
There are three broad classes of Agent:
1. Universal Agents hold broad authority to act on behalf of the Principal, e.g. they
may hold a power of attorney (also known as a mandate in civil law jurisdictions)
or have a professional relationship, say, as lawyer and client.
2. General Agents hold a more limited authority to conduct a series of transactions
over a continuous period of time;
3. Special Agents are authorised to conduct either only a single transaction or a
specified series of transactions over a limited period of time.
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Authority
For these purposes, the Principal must give, or
be deemed to give, the Agent authority to act.
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Principal (law)
In Commercial Law, a Principal is a person, fictitious or otherwise, who
authorises an Agent to act to create one or more legal relationships with a
Third Party. This branch of law is called Agency
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Liability of Agent to Principal
If the Agent has acted without actual authority, but the Principal is
nevertheless bound because the Agent had apparent authority, the
Agent is liable to indemnify the Principal for any resulting loss or
damage.
Liability of Principal to Agent
If the Agent has acted within the scope of the actual authority given, the
Principal must indemnify the Agent for payments made during the
course of the relationship whether the expenditure was expressly
authorised or merely necessary in promoting the Principal’s business.
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Liability of Agent to Third Party
If the Agent has actual or apparent authority, the Agent will not have
liability on any transactions agreed within the scope of that authority so
long as the Principal was disclosed, i.e. the fact of the agency was
revealed and the identity of the Principal revealed.
But where the agency is undisclosed or partially disclosed, both the Agent
and the Principal are bound.
Where the Principal is not bound because the Agent had no actual or
apparent authority, the purported Agent is liable to the Third Party for
breach of the implied warranty of authority
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Thank you for your attention
tupponi@commercioestero.net
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