International Commercial Law Notes | LPC Exam Revision

Actual & Apparent Authority
-​ Basic rule: Principal will be bound by a contract entered into by its agent if agent had
authority to enter into the transaction. If the Agent didn’t have authority the principal won’t
be bound.
-​ Two types of authority

Actual Authority

-​ Derives from agreement between P & A;
-​ P bound by anything that agent agrees with 3rd Party.
-​ Actual authority May be;
o​ Express; or
o​ Implied
▪​ E.g. sales Agent Implied authority to take all steps to market; unless the
agreement states otherwise.

Apparent Authority

-​ Viewed from position of the 3rd Party – e.g. the point of view of the retailer
-​ Derives from appearances: is 3rd party entitled to assume that Agent had authority.
-​ Factors:
o​ P holds Agent out as having authority.
▪​ E.g. provides agent with business cards, puts name on website etc.
o​ 3rd Party entitled to assume that Agent has the authority usual for agents in that
type of business.
o​ P bound as long as third party relied on the holding out.
▪​ If knew of lack of authority; no good.

Claim vs. Agent

-​ If P bound, can claim against agent for exceeding authority;

If P not bound, third party may have claim against agent for breach of warranty of authority.

, ICL Work Shop 2



Breach of Contract + Exclusion of Liability
(1): Claimant’s cause of action
Step 1 Relevant Terms in the Contract
Say there is a contract between S & B to____. Include all info relating to performance of the
contract. (Mind ST&C being exchanged as this will change offer and acceptance order.)
●​ Express:
●​ Implied:

s. 10 Time is not of the essence (Unless delivery s.29 S to deliver the goods
date expressly stated (Hartley v Hymans)) s.27 B to accept Delivery & Pay
s.12 to pass good title s.30 Delivery of wrong quantity
s.13 description s.14(3) Fitness for purpose
s.14(2) Satisfactory quality s.15 Sample

Step 2 ¿Are the terms incorporated? Either by:

●​ Signature
●​ Notice
●​ Previous Course of dealings


Step 3 Identify the Breach of Contract + Remedy

Say which relevant terms of the contract and how they have been breached and remedy:
●​ Breach of Condition: Repudiate Cont + Recover Price + Damages (Hadley v Baxendale)
●​ Breach of Warranty : Damages but NO right to repudiate Contract
●​ ¿What does the Client actually want?

Breach - Damages may be awarded + interests under: Law Reform Act + Late Payment of Commercial
Debts Act + Late Payment of Commercial Debts Regulations. (S wants own i rate to avoid having to rely
on these)(incentivise B to pay quickly by giving an early payment discount)
●​ If breach of an express term, say that it goes to the heart of the contract, so will be a
condition. Therefore, can (e.g. reject the goods) terminate the contract and seek
damages.


(2): Defence ¿Has liability been excluded?
Step 4 Slight Breach + Acceptance:

●​ s.15A = B’s right to reject is lost where the sale is not a consumer sale and the breach
is so light that it would be unreasonable for B to reject the goods. Applies only to
ss.13, 14 & 15, NOT to a stipulation concerning time of delivery. If a slight breach
occurs it renders the term a warranty rather than a condition (nor right to
reject/terminate). Apply to facts

, ICL Work Shop 2


●​ s.35 = B’s lost of right to reject when B: tells S it has accepted the goods, or does
something inconsistent with S’s ownership after the goods have been delivered to it.
●​ s.35(4) = B losses right to reject it retains the goods beyond reasonable period under
s.34(B’s right to inspect the goods)


Step 5 ¿Is the Exclusion Clause incorporated into the Contract? Either by:

●​ Signature
●​ Notice
●​ Previous Course of dealings


NB. Look out whose ST&Cs apply. In the battle of the forms “The last shot wins”.

Step 5 Construction:
¿Does the exclusion/limitation cover the breach?

Step 6 ¿Is the Clause invalidated by UCTA>:

●​ S.13: of UCTA states that a clause excluding liability either for description/ quality/
fitness/ purpose of the goods is subject to the reasonableness test in s.11.
●​ S.2: Liability for Negligence
●​ S.3: Sale of Goods B2B on Seller’s ST&Cs (exclusion of s.13,14 & 15 may be valid only so
far as reasonable)
●​ S.6: Sale of Goods:
•​ Restrictions on what can be excluded:

-​ S.6(1) Business & Consumer Buyers: s.12 – Title
-​ S.6(2) Consumers: s.13, 14, 15 – (Consumer Defined @ s.12)
o​ S.6(3) Business: s.13,14 & 15 only so far as reasonable.
●​ S.11: Reasonableness Test
●​ Schedule 2: Reasonableness Factors TB 94
●​ Caselaw: Watford Electronics Ltd v Sanderson – TB 95


Step 7 Conclusion:

Misrepresentation may be possible for either party. Usually for the buyer in these cases. Did
the B buy a product that did not comply with its description or was not what the B expressly
or impliedly told the S. Misrep = a statement of fact made by one P to the other before or at
the time of the contract which induced the other party to enter into the contract. Main
remedy is termination.

, ICL Workshop 3



Breach of Contract + Exclusion of Liability
Prep Task 1

1. ¿What are the relevant terms which may impose liability on the seller? (p.82)
​ Express terms in the contract:
An oral contract between S and B for S to supply 220 thirty-litre capacity polyethylene drums
(Catalogue ref: 9007.6309) for the price of £9,870 plus VAT. To be delivered on or before 14th
September.
Confirmed by Buyer by Fax dated 9th September 2012.
Confirmed by Seller by Fax dated 12th September 2012 (enclosing the T&C) (This qualifies as a
counter-offer as the Seller has included the T&C in his fax.)
Delivered on 13th September 2012. (Acceptance happened on this date when Floidex accepted
delivery of the goods without complaining about the T&C incorporated by the Seller)
Rejected by Buyer and notified to S by letter dated 15 September 2012. (Notified within terms under
clause 7.2 of the Seller’s T&C)
6 MONTHS have passed since the BREACH
​ Implied terms under SGA 1979:
​ ​ s.13 SGA Sale by Description.
s.13(1) where there is a contract for the sale of goods by description, there is an implied term that
the goods will correspond with the description.

2. Have the terms been incorporated? (p.82)
Yes, the terms have been incorporated by notice during the transaction. However, the Buyer may argue that
the notification with respect to the Seller’s T&C was given after the contract terms had been agreed.
Nevertheless, the Seller will state that the T&C were brought to the buyer’s attention before delivery of the
goods or before any invoice was sent to the buyer.

3. Have the terms been breached?
Yes, both the express terms and the implied terms have been breached. The goods do not correspond to the
description under the contract (or the catalogue by which the order was placed). The drums are smaller than
described.

4. What is the remedy sought?
s.13(1) is a condition under s.13(1A). Under s.11(3) the Buyer may repudiate the contract and claim damages
if the Buyer suffered loss. Thus, rejection of the goods + not to pay for them.

5. Consider ss.15A/s35 SGA if appropriate
s.15A in a Business to Business contract, was there a slight breach? If so, would render the term a warranty
rather than a condition (no right to reject/terminate if the condition mutates into a warranty). On facts,
difference in volume is no more than slight.

s.35(4) No question of acceptance on the facts.

6. Has Liability been excluded? (p.82)
1. Clause Incorporated in contract?: By Clause 7.1 of the Seller’s T&C the seller is excluding liability for
QUALITY of the goods with reference to the SGA 1979.
2. Validly Construction of the Clause? (p.84): This clause however fails to cover the breach by the Seller to
the Buyer as it refers to QUALITY and not to the DESCRIPTION of the goods. The breach is for the
DESCRIPTION of the goods not their QUALITY.