Skip to content

CS Professional · Drafting, Pleadings and Appearances · Commercial Contract Management

Agent Farhan signs a supply contract with Lotus Foods, who do not know of any agency, on behalf of undisclosed principal Bhatia Mills. A draftsman asks which clause best protects Lotus Foods in line with Section 231 about disclosure of the principal before completion. Which is the most appropriate?

The best clause lets Lotus refuse performance when the principal discloses himself before completion and Lotus shows it would not have contracted had it known the principal's identity or that Farhan was only an agent. This mirrors the second paragraph of Section 231.

  1. AA clause stating that Lotus may not refuse performance if the principal later appears
  2. BA clause stating that any disclosure of a principal before completion allows Lotus to refuse if it shows it would not have contracted had it known the principal's identity or the agent's statusCorrect
  3. CA clause stating that Farhan alone may enforce the contract
  4. DA clause stating that Section 231 does not apply to commercial contracts

Explanation

Section 231 second paragraph already lets the other party refuse after pre-completion disclosure if it shows it would not have contracted had it known the principal or the agency. A clause reflecting this protects Lotus consistently with the law. The other options either remove or contradict that right.

Did you get it right without looking?

One question tells you little. A timed set on Commercial Contract Management shows your real accuracy, how long you take and where you lose marks.

Practise Commercial Contract ManagementFree diagnostic mock

More Commercial Contract Management questions