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.