Bowstead & Reynolds give: ‘This contract is made between ourselves and yourselves as principals, we alone being liable to you for its performance.’ citing JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 516:

 

“These terms unambiguously specified that the contract is between “ourselves and yourselves as principals” and the words which follow — “we alone being liable to you for its performance” — cannot reasonably be construed as importing that the words “as principals” refer only to the “ourselves” (the brokers) and not also to the “yourselves” (the I.T.C.). Mr. Sumption's further submission that “as principals” does not mean “as sole principals” was described by Kerr L.J. as commercially implausible. With that I agree.”

 

You would presumably have to add an anti-assignment clause.

 

I am not sure whether you could keep the undisclosed principal out, however, in the case where the agent holds the contractual rights as trustee for the undisclosed principal, with the result that the UP has no direct rights against the other party, but can force the agent to sue, or do it himself by naming the other two as parties: Harmer v Armstrong [1934] Ch 65 (CA). It is possible that you could draft around that but you would have to be very explicit.

 

To keep out the liability of the UP, apart from similar drafting, the use of a deed in the contract between the agent and the other party may be enough (Final Note).

 

Lionel

 

 

 

 

Dear Colleagues:

 

I have read in a few places that lawyers will often use clauses to foreclose the ability of an Undisclosed Principal to intervene on a contract. Would any of you have an example of such a clause that I could share with my students?

 

Sincerely,

 

 

Jason Neyers
Professor of Law
Faculty of Law
Western University
Law Building Rm 26
e. jneyers@uwo.ca
t. 519.661.2111 (x88435)