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Commercial Law

Judgements should be a final decision

By August 19, 2016September 7th, 2023No Comments

A Court in a judgement delivered on 15th July, 2016, agreed with the judgement of the Court of Magistrates delivered on 18th June, 2014, in which it ordered Mary Gauci to pay the sum of €10,699.09 for promotional services carried out by Media Today Co. Ltd, despite claims that she was merely acting on behalf of and in representation of another company, Libertas Malta. 

Mary Gauci argued that she should not be held liable for the debts due to Media Today Ltd since she never personally engaged into a juridical relationship with the latter. This is because both when signing the booking order, as well as when the applicant company sought to be paid the claimed amount, Mary Gauci never acted on her own behalf but rather on behalf of a third party, that is, in representation of Libertas Malta – the local branch of the company Libertas Institute Ltd, duly registered in Ireland. 

The Court, with reference to M.C.F. Company Ltd -vs- Charles Buhagiar et delivered on 15th June, 2016, outlined a number of principles in relation to this issue. First of all, it held that as a general principle it is imperative that whenever one enters into an agreement, one should correctly know the identity of the person in whose favour he is contracting and who in turn is contracting an obligation in his favour.

Secondly, as observed in Bonnici noe -vs- Grima delivered on 30th April, 1992, it is not unusual for a person to enter into a contract solely on his own behalf and thus, whoever enters into an agreement with another is justified in assuming, both for his own peace of mind, and for the security of his commercial operations, that the person with whom he is contracting is concluding the contract for himself and not on behalf of someone else.

Thus, so as to ensure that a contract is concluded bona fede, whenever a person enters into a contract on behalf of someone else, one must always clarify, from the very beginning, that he is acting in representation of such other person whilst also clearly identifying his identity with the other party to the contract, that which the Italians refer to as spendita del nome, or contemplatio domini.

In other words, as established in Lawrence Formosa nomine et nomine -vs- Silvio Felice, delivered on 6th October, 1999, it was not enough for Gauci to rely on the simple declaration that she never negotiated with the plaintiff company in her own personal name, but she was also obliged to expressly exhibit the mandate to Media Today Co. Ltd. proving that she was authorized to act on behalf of Libertas Malta. The fact that negotiations were being carried out by a limited liability company, and thus, by an independent juridical person, meant that it was the mandatory’s obligation to indicate in the clearest and most unequivocal manner to Media Today that she would be acting on behalf of such company at the time when the obligation is being contracted. Should such person fail to make this fact known to the other party means that he would be assuming personal responsibility for the business contracted by him and for the obligation arising from such business. 

The burden of proof in such a case falls on the person alleging that s/he is acting on behalf of someone else so as to prove that the order is not being made in his own personal name. Evidence such as indications made on invoices and statements is to be measured in light of this rule and brought to the satisfaction of the court, whereby in the absence of evidence or even in case of doubt, the mandate may not be presumed, but rather is to be excluded. 

In this case, Gauci thus failed in her obligation to prove that Media Today had been notified that the business was being carried out by a commercial company and not in her own personal capacity. Although the name indicated on the booking order of the 13th May, 2009 and on the invoices for the printing of 160,000 leaflets and 12,000 business cards with Media Today Co. Ltd. indicated “Libertas Malta”, the person with whom contact was being made was Mary Gauci.

In fact, the contract regulating the commercial relationship was also accompanied with her authorized signature. Furthermore, despite the invoice for a payment of €10,699.06, being addressed to Libertas Institute, in an email sent by Libertas Malta to Media Today Co. Ltd, it had been clearly indicated that Mary Gauci was not duly authorized to enter into such obligations with the appellant company. This is further proved by the fact that the subject of the emails sent by Libertas Malta to Gauci never made any reference to the promotional services in question but vaguely referred to “budget” and “invoice May 09”. The fact that Gauci was employed with Libertas Malta at the time when the contract with Media Today was concluded, does not mean that she had a right to contract in the name of her principal. 

Furthermore, it was held that Gauci should also be obliged to personally make good for the debt, as although Libertas Malta is a branch of “The Libertas Institute Ltd”, the name as it appeared on the booking order is not officially registered in Malta as a company, and neither is there any proof that they have a juridical personality. 

Although Gauci claims that she had been promised the receipt of money, even if for the sake of the argument these were to be used for the financing of the company’s marketing with the applicant company, the fact that she chose to be bound with the appellant company before she received the money, then with respect to the applicant company she remains the legitimate defendant. Any agreements which she had with a third party is in any case a res inter alios acta for the applicant company. 

In any case, it seems that a substantial part of the payment was done through a bank account owned by Mary Gauci herself, without any evidence that such account had been opened in the name and in representation of Libertas Institute Ltd. This further proves that the account belonged to Gauci, in which account no deposit had ever been made by Libertas Malta with respect to payments due to Media Today. 

It is true that after the orders were made by Mary Gauci with Media Today and subsequently to the marketing services having already been rendered, representatives of the foreign company Libertas Institute Ltd tried to resolve the matter of the outstanding payment and indicated that they were going to try and bring funds themselves for its payment, in an email sent on 3rd November, 2009, they also clarified that they had never authorized such advertising and that they were not assuming any responsibility for it.

The only reason why they tried to resolve the issue themselves was because they recognized that the marketing concerning Libertas was effectively carried out by the appellant company. Despite claims by one of the representatives of Libertas Institute, Declan Ganley, that he was going to try and make good for the payments due from personal funds, which he had anticipated he would receive from third parties, the court is still not satisfied that there is sufficient proof that novation took place ex parte debitoris. 

Obviously, the only interest of the applicant company was that of getting paid, irrespective from whom. The promises of Libertas Institute Ltd never materialized and there is no clear proof that the applicant company exonerated the appellant from her obligations to pay the debts due. Thus, the Court held that the debtor was and should remain Gauci. 

Av. Malcolm Mifsud 


Mifsud & Mifsud

This article can be accessed on Malta Today.  

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