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Test of agency
Corporate & Other Laws
In test of agency point b) it is given there must be privity of contract but as per privity of contract third party to contract Cannot sue and agency is exception to privity of contract ( read in foundation). I couldn't understand how it could be a test of agency .
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Best Answer
Privity of contract means Only parties to contract can sue each other i.e. enforce claims against each other. When we say agency is an exception to doctrine of privity of contract, it means principal can enforce the contracts entered by his agent [agent acts within the scope of authority and in the name of the principal]. So, test of agency is whether agent can establish privity of contract between the principal and third parties i.e. enable principal and third parties to enforce claims against each other
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