Who to Sue – Agency Law Disputes –  Gregor Fisken Limited v Bernard Carl

Knowing who to sue, or whether the party suing you has the right to do so, is fundamental.

Often, if you’ve bought a faulty vehicle, employed a dodgy car restorer or builder, or if you’re on the other side of the fence, you’ll probably ‘Google’ your legal rights.

But without knowing who’s who, your legal rights are as good as useless.

Aside from an insight into the world of high value classic and collector cars and contract law involving the sale of goods, the case between the British supercar dealer Gregor Fisken and U.S lawyer Bernard Carl involving the sale of the rare $44 million classic Ferrari 250 GTO and the missing gearbox has been well publicised; it also touches on the issue of agency law and who is entitled to sue in contract.

Secret agent

Defendants raise the defence of ‘no contract’ by simply claiming the contract is not with them because they were acting as an agent for the buyer or seller.

This often comes up in cases where a vehicle is being sold on a sale or return basis or in the construction industry, the position of a subcontractor in a building project.

However, naturally, it’s not as straightforward as playing a ‘get out of liability’ card.

Privity of contract

A central tenet of contract law is privity of contract, namely a person cannot acquire and enforce rights under a contract to which they are not a party.

This all seems straightforward, but what about if the person named in the contract claims they’re not a party but an agent?

The Parol Evidence Rule

The Parol evidence rule dictates that in circumstances where there is a written contract the terms included in it are taken as read, and oral evidence can alter or vary those terms.

In short, as pointed out in the Gregor Fisken case, the people who signed the contract are the parties to it, unless the contract document clearly states the person signing is doing so on behalf of a “sufficiently identified” company or principal.

The exception is where there is “extrinsic evidence”, which proves both parties to the contract knew one or other was signing on behalf of a company or a principal.

Secret agent – undisclosed principal

According to the case Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199 (1) “an undisclosed principal may sue and be sued on a contract made by an agent on his behalf, acting within the scope of his actual authority. (2) In entering into the contract, the agent must intend to act on the principal’s behalf. (3) The agent of an undisclosed principal may also sue and be sued on the contract. (4) Any defence which the third party may have against the agent is available against his principal. (5) The terms of the contract may, expressly or by implication, exclude the principal’s right to sue, and his liability to be sued.”

This perspective seems opposed to the fundamental principles of contract law, namely “consent” which is difficult if one party does not know of the existence of the other.

This is countered to an extent by circumstances where the identity of the parties is secondary or irrelevant to the subject matter, for example, if the intention to sell a car is to be paid for it, then does it matter who does the paying? (Lewis v Averay [1972] 1 QB 198)

Conclusion

The Gregor Fisken Limited v Bernard Carl provides a useful insight into the process adopted by the court when dealing with the defence of ‘no contract’ in cases involving agents.

This article is an overview of the law and does not replace formal legal advice tailored to your specific query. For further information, contact Stormcatcher Law at 0333 700 7676 or email knowledge@stormcatcher.co.uk.

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