Agency 05/01/2018

Agency
 A contract whereby a person binds himself to render some service
or to do something in representation or in behalf of another, with
the consent & authority of the latter
Elements
 Consent
 Object
 Agents acts as representative & not for himself
 Agents acts within the scope of his authority
Characteristics
 Principal
 Preparatory
 Consensual
 Onerous
 Nominate
 Bilateral
 Commutative
Acts that may be delegated- act which one may lawfully do personally
may be delegated, except for:
 Acts which are personal in nature
 Acts which are prohibited by law to be delegated
Relationship between principal & agent
 Fiduciary; based on trust & confidence
How agency relationship is created
 By appointment
 By ratification
 By estoppel
 By necessity
Kinds of agency
 According to form
o Express
 Oral- valid, unless law requires a specific form
 Written
 Those that require a special power of attorney
 Sale of a piece of land
o Implied
 Acts of the principal
 Silence of the principal
 Lack of action of the principal
 Failure of the principal to repudiate the agency knowing
that another person is acting in his behalf without
authority
 According to extent
o General agency- one that comprises all the businesses of the
principal
o Specific agency- one that comprises one or more specific
transactions
 According to authority conferred
o Agency couched in general terms- comprises only acts of
administration (general power of attorney)
o Agency couched in specific terms- a special power of attorney
is required for the performance of the following specific acts
 To make such payments not usually considered acts of
administration
 To effect novations
 To compromise
 To submit questions to arbitration
 To renounce the right to appeal from judgment
 To waive objections to the venue of an action
 To waive obligations gratuitously
 To enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously
or for a valuable consideration
 To make gifts except the ff. where a general power of
attorney is sufficient
 Customary ones for charity
 Those made to employees in the business
managed by the agent
 To loan or borrow money, except;
 If the borrowing of money is urgent for the
preservation of the things which are under
administration
 To lease any real property to another person for more
than one year
 To bind the principal to render some service without
any compensation
 To bind the principal in a contract of partnership
 To obligate the principal as a guarantor or surety
 To create or convey real rights over immovable
property
 To accept or reject an inheritance
  To ratify or recognize obligations contracted before the
agency
 Any other act of strict dominion
Kinds of acceptance of agency by agent
 Express- orally or in writing
 Implied
o Acts which carry out the agency
o Silence or inaction according to the circumstances
o Cases:
 Between two persons who are present
 There is implied acceptance if the principal
delivers his power of attorney to the agent & the
latter accepts it w/o any objection
 Between two persons who are absent
 When the principal transmits his power of
attorney to the agent, & the latter receives it w/o
any objection
 When the principal entrusts to him by letter or
telegram a power of attorney w/ respect to the
business in which he is habitually engaged as
agent, & he did not reply to the letter or telegram
Announcement of appointment of an agent
 By special information- w/ regards to specific person
 By public advertisement- w/ regards to any person
Announcement of revocation of appointment of an agent
 If announcement of appointment is by special information;
announcement of the revocation of the appointment shall also be
made by special information
 Announcement of appointment is by public advertisement-
announcement of revocation should be by public advertisement
Basic principles of agency
 The agent must act within the scope of his authority
 o Not considered exceeded if it have been performed in a
manner more advantageous to the principal than to him
(agent)
 The agent must act in behalf of his principal
Effects if an agent acts within the scope of his authority & behalf of the
principal
 The act is valid
 The principal alone is liable, unless the agent expressly bound
himself
Effects if one or both principles are absent
 Agents acts within the scope of his authority but in his (agent’s)
own behalf
o The principal has no right of action against the person with
whom the agent has contracted
o The person with whom the agent has contracted has no right
of action against the principal
o The agent is the one directly bound in favor of the one with
whom he has contracted as if the transaction were his own
except:
 The contract involves things belonging to the principal;
the principal shall have right of action against the third
person, & the third person against the principal
 Agents acts in excess of the authority of his principal & in the
principal’s behalf or person acts without the authority of another
but in the latter’s behalf
o Unenforceable against the principal, unless ratified
 Both principles are absent
o Valid between the agent & the third person
Obligations of the Agent 05/01/2018
Obligations of a person who declines an agency
 If a person appointed as an agent but declines the appointment, he
is bound to observe the diligence of a good father of a family in the
custody & preservation of the goods forwarded to him by the owner
Obligations, in general, of a person who accepts an agency
 To carry out the agency
 To be liable for damages w/c, through non-performance, the
principal may suffer
 To finish the business already begun on the death of the principal,
should delay entail any danger
Specific obligations of an agent
 To advance necessary funds if there was stipulation to that effect,
except when the principal is insolvent; w/c results in the
extinguishment of the agency
 To act in accordance with the instructions of the principal
 Not to carry out an agency if its execution would manifestly result
in loss or damage to the principal
 To be liable for damages if there being a conflict between his
interest & that of the principal, he should prefer his own
 Not to borrow the money of the principal w/o the principal’s
consent, if the latter has authorized him to lent the principal’s
money at interest
 To render an accounting of his transactions & to deliver to the
principal whatever he may have received by virtue of the agency,
even though it may not be owing to the principal
o Any stipulation exempting the agent from the obligation to
render an account shall be void
 Agent’s liability when he appoints a substitute
o Sub-agent (substitute) is a person to whom the agent
delegates, as his agent the performance of an act for the
principal w/c the agent has been empowered to perform
 Liability of two or more agents if they have been appointed
simultaneously
 To be liable for interest on the sums he has applied to his own use
from the day on which he did so, and on those which he still owes
after the extinguishment of the agency
  Agent’s liability if he contracts in the name of the principal
o General rule: the agent who acts as such shall not be liable to
the party w/ who he contracts
o Exceptions: the agent shall be personal liable in the following
cases:
 If he expressly binds himself
 If he exceeds the limits of his authority w/o giving such
party sufficient notice of his powers
 Rule if the other party was aware of the agent’s
acting beyond the limits of his authority
 If the agent did not undertake to secure the
principal’s ratification, the contract shall be
void
 If the agent undertook to secure the
principal’s ratification of the act & the
principal does not ratify the same, the agent
shall be liable
 If the principal ratifies the contract, the
contract shall be enforceable against the
principal
 To be responsible not only for fraud, but also for negligence
Commission Agent
 One who buys & sells goods or chattels consigned or delivered to
him by his principal for a compensation known as commission
 General Rule: The commission agent cannot sell on credit
 Exception: the commission agent can sell on credit only with the
express or implied consent of the principal
 Del credere commission (guaranteed commission)
o Additional commission by which the agent shall bear the risk
of collection & shall pay the principal the proceeds of the sale
on the same terms agreed upon with the purchaser
Obligations of the principal
 To comply with all the obligations w/c the agent may have
contacted w/in the scope of his authority
 To be bound for any obligation wherein the agent exceeded his
power if he ratifies such obligation expressly or tacitly
 To be solidarily liable with the agent if he allowed the latter to act
as though he had full powers when the agent exceeded his
authority
 To advance to the agent the sums necessary for the execution of
the agency should the agent so request
 To reimburse the agent the sums advanced by the latter even if the
business or undertaking was not successful provided the agent is
free from all fault
 To indemnify the agent for all damages w/c the execution of the
agency may have caused the latter
 Liability when there are two or more principals, they shall be
solidarily liable for all the consequences of the agency
EXTINGUISHMENT OF AGENCY 05/01/2018
Modes of extinguishment
 By revocation
 By withdrawal of the agent
 By the death, civil interdiction, insanity or insolvency of the
principal or of the agent
 By the dissolution of the firm or corporation w/c entrusted or
accepted the agency
 By the accomplishment of the object or purpose of the agency
 By the expiration of the period for which the agency was constituted
Revocation
 Refers to the act of the principal of terminating the agency at will
confidence & representation being the foundation of the contract
 Kinds of revocation
o Express- when made orally or in writing
o Implied
When Agency may not be revoked at will
o If a bilateral contract depends upon the agency
o If agency is a means of fulfilling an obligation already
contracted
o If a partner is appointed manager of a partnership in the
contract of partnership & his removal from the management
is unjustifiable
o If agency is coupled with interest
Withdrawal by the agent
 How? By the agent giving due notice to the principal of his
withdrawal
 Liability/obligation of an agent who withdraws
Death of the principal
 General rule: death of the principal extinguishes the agency,
however, the agency is not extinguished in the following:
o If the agency has been constituted in the common interest of
the principal & the agent
o If the agent has been constituted in the interest of a third
person who has accepted the stipulation in his favor
Death of the agent
 Extinguishes the agency
 Duty of agent’s heir
o To notify the principal of the agent’s death
o To adopt in the meantime such measure as the circumstances
demand in the interest of the principal