If an agent is given the authority to lend, can the agent himself lend the money?

Generally No. Exception is the principal gives his consent. If the principal does not agree, only third parties may borrow the money.

Reason: Conflict of interest. This opens room for abuse of the agent’s authority.
Example: He can always say that Mr X, the borrower can no longer (Himanhiman siya ra diay si Mr X).
He controls the rate of interest imposed on the debt. (Boss, 2% lang atu interest ani. Ingnan dayun ang borrowers nga 5% ang interest) he
fraudulently enjoys the profit dayun.

On the other hand, If you are authorize to borrow can you lend?

Yes. Parties now may easily determine the terms as to their contract of loan.

From these illustrations, what did we notice?

The agent must perform his obligation with due care and must prioritize the interest of the principal over his interest.

**The Kissing Scene**

>Authority is to kiss on the cheek but the kiss landed some place else ;)

In the above case, the agent has exceeded his authority.

The law expects the agent to act strictly within the limits of his authority. Otherwise, if he exceeds his authority, it will not bind the
principal.

What is necessary in order that the act of the agent will be binding upon the principal?
1. The agent must have authority
2. He must act within the limits of his authority
3. He must follow the instructions of the principal
4. He must disclose the name of the principal
[The two most important elements are that: (1) He acted within the limit of the authority given and (2) he disclosed the principal]

Discussion: If the agent did not disclose the principal, then the latter has nothing to do with the contract under the Principle of Privity of
contract. This means that the contract will only bind the parties. The principle of liberality also applies in a contract of agency.

Should the authority given to the principal always be in writing?

No, it need not be in writing.

Discussion: As a matter of fact, it may be given orally. Actual authority need not be expressly given, because we said that it may be impliedly
given. Although not impliedly given even, there are circumstances where we can presume authority. Namely?

(Student recites the implied creation of an agency and implied acceptance. However, this is not correct because they are different from an
implied authority. Pero gi pa recite nlang jpun niya to better distinguish them from an implied authority.)
Implied Agency
1. By the acts of the principal
2. Silence or failure to act
3. Principal fails to repudiate, knowing that another person is acting in his behalf without authority

(Implied) Acceptance of Agency

 Between persons who are absent->implied if the principal delivers his power of attorney to the agent and the agent receives it without any
objection
 Between persons are absent- >acceptance cannot be implied, EXCEPT: (1) when the principal transmits his power of attorney to the agent,
who receives it without objection or (2) when the principal entrusts to him by letter or telegram a power of attorney with respect to the
business in which he is habitually engaged as an agent, and he did not reply to the letter or telegram.

Implied acceptance is DIFFERENT from implied authority

Express Authority- when the principal defines exactly what the agent can do or perform.
Implied Authority- are those that are incidental to the express authority.

Illustration:
X is the principal. He authorized me to sell his book. When I sold it to Y, he asked me for a receipt. In that case, I can issue a receipt because it
is an incidental to my authority to sell.

404 Sept 19
So, that is an example of an implied authority, when you perform an act incidental to the express authority.

Any other authority which is not expressly provided but the agent can perform?

Authority by necessity- the intention of doing the act is to protect or preserve the subject of the agency or thing of the principal

This is now a very thin line. Because if it is always an express authority, that is not a problem. But now, we are saying that there are instances
when the agent can perform acts which are not expressly given but could be implied from the express authority or acts which are not
express and yet under the circumstances, by necessity or urgency, he has to do. That’s a very dangerous line.

How are we to follow that thin line?

Even without express authority, you can act so long as the intention was for the benefit of the principal or to protect or preserve his
property.
Generally, if you exceed the authority, it will not bind the principal and the authority ceases as well. That is why the law provides that even if
the agent exceeds his authority, there is an instance when the agent’s acts will still bind the principal.

What is this instance?

When the principal ratifies the agent’s acts.

404 Sept 19