Kuwait Court of Cassation principle number 368

Summary: - Characterizing an action and giving it its true description. Within the authority of the court of merits. Condition thereof. - Interpreting contracts and ascertaining the contracting parties’ intention from the circumstances and facts of the case. Within the authority of the court of merits. Condition thereof. - Conclusion of a contract by an agent. Permissible in his capacity as a principal, not as an agent. Condition thereof: if he does not disclose his capacity as a representative at the time of contracting. It is regarded as an undisclosed agency. Implication thereof. The effects of the contract accrue to the principal, and the agent is regarded as having lent his name to the principal. This undisclosed agency is governed in the same manner as a disclosed agency. Effect thereof: the effects of the contract accrue to the principal and to the person contracting with the undisclosed agent. Rule: It is settled in the jurisprudence of this Court that the court of merits is obliged to give the action its true description and correct legal characterization without being bound by the litigants’ characterization of it, and that what matters in characterizing the action is not the literal wording of its expressions but what the claimant intended by it, taking into account the facts and justifications he advances. Interpreting contracts and ascertaining the contracting parties’ intention from the circumstances and facts of the case also fall within the authority of the trial judge. It is settled that an agent may conclude the contract which the agency authorizes him to execute, not in his capacity as an agent but in his capacity as a principal, if he does not disclose his capacity as a representative at the time of contracting. He is regarded as having lent his name to the principal who appointed him to conclude the contract. The rule governing this undisclosed agency is that it produces, in relation to the principal, all the legal effects produced by a disclosed agency. Thus, the effects of the contract accrue to the principal and to the person contracting with the undisclosed agent, who is legally prohibited from appropriating for himself anything which he was appointed to obtain for his principal’s account. This requires that the capacity, as between the principal and the agent, be considered to have been established for the principal’s benefit and account, so that he acquires all rights arising from the contracting, while the agent acquires none of those rights and may not resort to any device to appropriate the transaction to the exclusion of the principal.