Each of us conclude contracts every day of our lives; often these contracts will be insignificant and mundane, such as buying movie tickets over the internet or a newspaper from a vendor, but sometimes they are more financially significant such as buying a house or signing an employment contract.
Often one isn’t even present when concluding a contract: our law permits a person wishing to contract to authorise another to represent him or her. The absence of the contracting party at the conclusion of the contract may be owing to an inability to be present such as due to an illness or being away on a trip. Or the person may have a legal disability requiring another to contract on his behalf, such as minority. It is often physically impossible for the contracting party to be present in a tangible form: a juristic person such as a company requires a human to represent it in concluding a contract.
Representation is the principle whereby one person concludes a legal act on behalf of another. Thus in a contract by one person as a representative of another, the rights and obligations arising from the contract attach to the person represented (often called “the principal”) and not to the representative (often called “the agent”).
Here are some of the main points governing the conclusion of contracts using representatives:
* By and large, all types of juristic acts can be concluded by representatives, although there are some exceptions: in SA the conclusion of a marriage must be done in person and not through representatives.
* In order to conclude juristic acts on behalf of another, a representative has to have the necessary authority. A person who lacks the capacity to contract cannot give authority to another, for example, while under the influence of alcohol a person or a “lunatic” lacks capacity and thus cannot authorise an-other to represent him or her contractually. Other times authority is simply derived from the representatives position, for example a guardian may represent his child, and a court appointed curator will represent a mentally incapacitated patient
* Subject to certain exceptions, the authority given by a principal to his representative may be oral or in writing. However, as oral authority is difficult to prove to third parties, it is common for authority to act as one’s representative to be recorded in a document called a “power of attorney” (see article on page 4)
* No specific form of words is required to ex-press the intention that the representative is concluding a contract for another: the words “on behalf of” usually indicate a situation of representation. Often a representative will sign his name on a contract using the letters “pp”, an abbreviation of the Latin term “per procurationem” which translates as “by the agency of”
* As a contract requires two parties, a representative can’t enter into a contract with himself on behalf of his principal; such a “contract” will simply be a nullity
* The authority of a representative to conclude juristic acts on behalf of another lapses on the death of that other. Obviously as a dead per-son cannot contract, the authority conferred on others by the deceased lapses on his or her death.