II. Agency

1. Direct representation: introduction

Not only the contract in favour of a third party but also the modern law

of agency have been developed, in the civil-law systems, largely in

opposition to the situation in Roman law. Again, it was the "alten

stipulari nemo potest" principle which stood in the way; again,

however, matters were complicated by the fact that the Corpus Juris

Civilis did not really present a very clear and consistent picture. Again,

it was Hugo Grotius who had a major impact on the development; m

particular, he advanced the legal analysis by distinguishing for the first

time between contracts in favour of a third party and agency: "Solent

Cf. in this context the polemic though instructive remarks by von Kirchmann. Die

Werthlosiqkeit der Jurisprudenz als Wissenschaft (1848), as quoted by Zwcigcrt/Kutz/Weir.

p. 126. m Cf. e.g. Mutual Life Insurance Co. of New York v. Hotz 1911 AD 556 sqq.; McCullogh v.

Fernwood Estate Ltd. 1920 AD 204 sqq. and the criticism by Dc Wet, op. cit., note 43,

pp. 146 sqq.; Dc Wet en Yeats, pp. 94 sqq. For a different view, see J. Kerr Wylie,

"Contracts in favour of third parties", (1943) 7 THRHR 94 sqq. 81 Cf. the comparative analysis by Zweigert/Kotz/Weir. pp. 124 sqq. H~ Cf. the comparative analysis by Zweigert/Kotz/Weir, pp. 133 sqq.; and the historical

analysis by Palmer, (1989) 33 American Journal of Legal History 3 sqq. юЪип!ор Pneumatic Tyre Co. Ltd. v. Selfridge and Co. Ltd. [1915] AC 847 (HL) at 853;

cf. also Beswick v. Beswick [1967] 2 All ER 1197 (HL); Treitel, Contract, pp. 458 sqq. 84 Cf. Buckland/McNair, pp. 214 sqq.; Arthur L. Corbin. Contracts for the Benefit of Third

Persons, (1930) 46 LQR 12 sqq.; Louise Wilson, "Contract and Benefits for Third Parties",

(1987) 11 Sydney LR 230 sqq.

Created with novaPDF Printer (www.novaPDF.com)

46 The Law of Obligations

et controversiae incidere de acceptatione pro altero facta: in quibus

distinguendum est inter promissionem mihi factam de re danda alteri,

et inter promissionem in ipsius nomen collatam cui res danda est.""5

This distinction is based on Grotius' general emphasis on the will of the

contracting parties, and it has remained fundamental ever since.86 It was

developed as a consequence of the rejection of the "alteri stipulari nemo

potest" principle. As long as this principle was applied, it was seen to

refer to all situations in which an independent third party acquired a

right under a contract which had been concluded between two other

parties. This is exactly what (genuine) contracts in favour of third

parties and agency have in common, and therefore it had hardly been

necessary thus far to differentiate cases which were prohibited anyway.

Agency, as we see it today, refers to a situation where one person (the

agent), authorized by a third party (the principal), concludes a

transaction on behalf of the latter with another person, with the result

that such transaction will take effect between the principal and this other

person.87 Thus, the main difference from what we call a contract in

favour of a third party lies in the fact that in the one case the principal

in every respect becomes party to the contract that has been concluded

by the agent; the agent is merely acting as a conduit pipe and has no

concern with the effects of the transaction. In the other case, the third

party acquires only the right to claim performance. He does not

become a party to the contract which is concluded, and becomes

effective, between promisor and promisee. Thus, the imposition of a

duty to perform is conceivable only in the case of agency; a contract not

only for the benefit of, but casting a burden on a third party is not, and

has never been, admissible.88 If one looks at the will of the parties

concerned, one can say that the agent wants to accept the promise in the

name of the principal, whereas the promisee under a contract in favour

of a third party wants to act in his own name for the benefit of the third

party. For agency, the continental legal systems specify a further

requirement: the agent has to act in the name of the principal,ay and

85 De jure belli ac pads. Lib. II, Cap. XI, 18. 1 The distinction is sometimes blurred; cf., tor example, supra, notes 48, 69. ' Thus, one

person acts, but the effects of that act arise in a third party. Rabel, "Die Stellvertretung

in den hellenistischen Rechten und in Rom", in: Atti del congresso internazionale di

diritto romano, vol. I (1934), p. 238, has called this a legal miracle ("Ursprunglich

%ibt es nirgends eine direkte Stellvertretung. Sie ist ein juristisches Wunder"). HH Cf. Raul/D. 45, l', 83 pr.; Windscheid/Kipp, § 317; Klaus-Peter Martens, "Rechtsgeschaft

und Drittinteressen", (1977) 177 Archiv jur die civilistische Praxis 139 sqq. The

validity of such a transaction is (in modern times) incompatible with the autonomy of each

individual to enter into legal transactions (Privatautonomie). In the case of agency, this

problem docs not arise, as the principal has conferred the power of agency on the agent. 89 Cf., for example, Windscheid/Kipp, § 73, n. 15; Wolfram Muuer-Freienfels, Die

Vertretung beim Rechtsgeschaft (1955), pp. 15 sqq.; Karsten Schmidt, "Offene Stellvertretung"

1987Juristische Schulung 425 sqq.; cf. also art. 1984 code civil; art. 1388 codice civile. For a

comparative evaluation, see Philippos Doris, "Die unmittelbare Stellvertretung des BGB im

Created with novaPDF Printer (www.novaPDF.com)

Stipulatio alteri, Agency and Cession 47

must therefore make it clear to the other party that he is not acting in

his own name.90 This is the publicity principle'" which, incidentally,

had also already been enunciated by Grotius and the other natural

lawyers.92 In contradistinction, English law recognizes the "undisclosed

principal":91 as long as the agent has authority to act at the time

when the contract is made, the principal acquires rights and duties

under this contract even if the agent did not reveal the fact that he was

acting on behalf of another. Although this has often been regarded as a

strange anomaly of English law,94 the undisclosed principal has

managed to creep into one civil-law system, namely the usus hodiernus

of Roman-Dutch law.95 According to the South African Appellate

Division, the opportunity to expel the uncouth intruder has unfortunately

been lost.96