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Enron Mail |
I have been reviewing procedures that would need to be put in place to cover
counterparties from other jurisdictions trading Australian power. There is one related contractual issue I have not been able resolve. As it is not an issue at peculiar to Australia I would appreciate your input. My apologies in advance if I am covering well trodden ground. It is settled that a counterparty will enter into one Password Agreement and one ETA. There will be a principal Enron contracting party for the PA and ETA, which I will refer to as the "Enron Principal" . However the definition of "Enron"in both documents also includes other Enron affiliates. In this way the Enron Principal enters into the PA and the ETA as an agent for any affiliate that may at some stage enter into an EnronOnline Transaction with that counterparty. This means the relevant Enron affiliate could enforce the terms of the PA and ETA . This is in addition to the rights of the Enron Principal to enforce the ETA and PA. But what happens if the Enron affiliate is not in existence (i.e. has not been incorporated) at the time the PA is signed and the ETA is accepted by the counterparty? It is settled law in Australia and I believe in England that you cannot be a party to a contract if you don't exist. What does this mean? Well in most instances not much. If it was a question of enforcement of the contractual terms of the ETA or the PA the Enron Principal could seek the relevant remedy such as an injunction or specific performance. But procedural problems in litigation could arise if a newly incorporated Enron company suffered damage through a breach by a counterparty of the ETA. For example a breach of the indemnity in clause 4. The Enron Principal could not sue for damages as it would have suffered none. Whilst not a major issue it may be prudent to ensure EnronOnline procedures recognise the particular circumstances that arise when introducing a newly incorporated Enron entities as contracting parties through EnronOnline.
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