Nature, Form and Kinds of Agency
Nature, Form and Kinds of Agency
Nature, Form and Kinds of Agency
The basis is representation not form of service or employment. Phrase for or in our behalf does not necessarily establish an agency. What is decisive is the intention of the parties.
Kind of Contract: It is a preparatory contract. It is a contract entered not for its own end but to be able to enter into other contracts.
Essential Elements of Agency: 1.) Consent, express or implied;
2.) Object of the contract is the execution of a juridical act in relation to 3rd persons;
3.) The agent acts as a representative and not for himself; 4.) The agent acts within the scope of his authority.
Characteristics:
1.) Consensual: perfected by mere consent; 2.) Nominate: it has its own name;
3.) Principal: does not depend on another contract for its existence and validity;
4.) Preparatory: entered into as a means to an end; 5.) Unilateral/Bilateral: a.) Unilateral: if contract is gratuitous, it creates obligations for only one of the parties, i.e. agent. b.) Bilateral: if for compensation, it gives rise to reciprocal rights and obligations.
Basis:
Representation-The acts of the agent on behalf of the principal within the scope of his authority produce the same legal and binding effects as if the principal personally did them.
Distinguishing Features:
1.) Representative character; and 2.) Derivative authority.
Purpose: To extend the personality of the principal through the facility of the agent (constructive representation)
Parties:
1.) Principal the party represented 2.) Agent the party who represents the principal 3.) Sub-agent agent of the agent; the contract of agency may prohibit the agent from appointing a sub-agent
Acts that cannot be done through an agent: 1.) Personal acts: if personal performance is required by law or public policy or agreement; 2.) Criminal or illegal acts: attempt to delegate another authority to do an act which, if done by the principal would be illegal, is void.
Basis is representation.
Basis is employment
Agency v. Guardianship
Agency Guardianship
Agent represents a capacitated Guardian represents an person. incapacitated person. Agent appointed by principal and can be removed by him. Agent subject to directions of principal. Agent can make principal personally liable. Agent appointed by principal and can be removed by him. Guardian not subject to directions of ward but must act for his benefit. Guardian has no power to impose personal liability on his ward.
Agent can return object in case Generally, buyer cannot return he is unable to sell to a 3rd the object sold. person. Agent in dealing with the thing received is bound to act accdg to the instructions of his principal Buyer can deal with the thing as he pleases, being the owner.
Agent
Independent Contractor
Employed by employer.
Principal liable for torts Employer not liable for torts committed by agent w/in scope committed by independent of authority. contractor.
Agency v. Partnership
Agent Acts for the principal nor for himself Partner Acts for himself, the firm and co-partners. Partnership is a branch on the law on agency
Agency v. Trust
May be generated by contract or not, or by law Trustee may hold title over the property Terminated upon the accomplishment of the purpose to which it was formed or established
Art. 1869. Agency must be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.
Classifications of Agency: as to
a)
b.)
Implied: implied from (i.) acts of principal,(ii.) from his silence or lack of action or (iii.) his failure to repudiate the agency knowing that another person is acting on his behalf w/o authority. The enumeration is not exclusive, there may be other situation of implied agency
b.)
b.) Simple/Commission: agent acts in his own name but for the account of the principal.
d.)
Legal: formed by operation of law (Art. 1803, 1884 par 2,1885, 1929 and 1932)
b.)
Form:
Generally NO formal requirements. Agents authority may be oral or written; it may be in public or private writings. The only exception is when the law requires a specific form (e.g. sale of real property or any interest therein by an agent.)
Art. 1870. Acceptance by the agent may also be express, or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances.
Acceptance:
A person has a right to represent or reject his appointment as an agent. It is only in legal agency where he cannot refuse the creation of the agency because the law dictates.
Art. 1871. Between persons who are present, the acceptance of the agency may also be implied if the principal delivers his power of attorney to the agent and the latter receives it without any objection.
Between 2 persons who are present, when it acceptance deemed implied?
When the agent receives a power of attorney from the principal himself personally without objection.
Construction:
A power of attorney is strictly construed and strictly pursued. The instrument will be held to grant only those powers which are
specified, and the agent may neither go beyond nor deviate from the
power of atty. The only exception is when strict construction will destroy the very purpose of the power.
Except as may be required by statute, a power of attorney is valid although no notary public intervened in its execution (Lim Pin v. Liao Tan, 115 SCRA 296)
Art. 1872. Between persons who are absent, the acceptance of the agency cannot be implied from the silence of the agent, except:
1.) When the principal transmits his power of attorney to the agent, who receives it without any objection;
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.
Condition of creation
Manner of delivery
The Power of Attorney is not personally delivered. There is transmission by messenger, letter or telephone
Art. 1873. If a person specially informs another or states by public advertisement that he has given a power of attorney to a third person, the latter thereby becomes a duly authorized agent, in the former case with respect to the person who received the special information, and in the latter case with regard to any person.
The power shall continue to be in full force until the notice is rescinded in the same manner in which it was given.
Effects:
1.) Special information: the person appointed as agent is considered such with respect to the person to whom it was given.
2.) Public advertisement: Agent is considered such with regard to any person.
Except: if you can prove that the 3rd person read the notice
in the newspaper.
Agency by Estoppel:
There is really no agency at all, but the alleged agent seemed to have apparent or ostensible, although no real authority to represent another.
c.) As to 3rd persons One who knows that another is acting as his agent or permitted another to appear as his agent, to the injury of 3rd persons who have dealt with the apparent agent as such in good faith and in the exercise of reasonable prudence, is estopped to deny the agency. A 3rd person, having dealt with one as an agent may be estopped to deny the agency as against the principal, agent or 3rd persons in interest.
Agency by Estoppel
There is no actual agency. Hence, he has no rights and duties as an agent
The one who caused (either the principal or agent) is the one responsible. In both cases, the third person must have acted in good faith.
Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.
Sale, How effected: 1. Through the owner himself: if not made in writing the contract of sale is unenforceable not void. It is however subject to ratification. 2. Through an agent of the owner: if not in writing the contract of sale is not unenforceable but void. It is not therefore subject to ratification. The authority of the agent to sell must be in writing, otherwise the sale is void.
A letter is sufficient authorization to an agent [Jimenez v. Rabot]. Is Repurchase Included Within the Contemplation of Law?
The law speaks of Sale. Repurchase, however, through an agent, partakes of the nature of sale, which when effected through an agent, the agency should be in writing to be valid (Fernandez v. Rabot, 4 CAR 221)
Art. 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary. The presumption is rebuttable. Gratuitous Agency: when the service rendered is undertaken to be gratuitous, the law does not raise an implied promise to pay therefor, though the service be valuable (Robinson v. Lincoln Trust, 95 NJL 445)
Broker: One who in behalf of others, and for compensation or fee, negotiate contracts relative to property. He is the negotiator between the parties, never acting in his own name, but in the name of those who employ him. He is strictly a middleman and for some purposes, the agent of both parties.
A broker is never entitled to commission for unsuccessful efforts. It is only after the transaction has been concluded that the broker acquires vested interest in or right to his commission.
Furthermore, the transaction need not only be perfected but also consummated to justify brokers or agents commission.
Measure of Compensation Compensation depends upon the specific stipulation of the parties. In the absence of such, compensation shall be based on quantum meruit basis.
Does the law allow double agency? Double Agency: when the agent is acting simultaneously for
both the seller and the buyer. Such agency is disapproved by law for being against public policy and sound morality.
The exception is where the agent acted with full knowledge and free consent of the principals.
In case the agent assumes a double agency, what is his right to compensation?
1.) If with knowledge of both principals recovery can be had from both. 2.) If without knowledge of both agent can recover from neither. 3.) If with knowledge of only one as to the principal who knew of that fact and as to the agent, they are in pari delicto and the courts shall leave them as they were, the contract between them being void as against public policy and good morals.
Art. 1876. An agency is either general or special. The former comprises all the business of the principal. The latter, one or more specific transactions. Classification of Agents:
1.) Universal agent: One employed to do all acts that the principal may personally do, and which the principal can lawfully delegate to another the power of doing. 2.) General agent: One employed to transact all the business of his principal, or all business of a particular kind or in a particular place, or in other words, to do all acts connected with a particular trade, business, or employment.
3.) Special/Particular agent: One authorized to act in one or more specific transactions, or to do one or more specific acts, or to act upon a particular occasion. e.g.: a.) Attorney at law: One whose business is to represent clients in legal proceedings. b.) Auctioneer: One whose business is to sell property for others to the highest bidder at a public sale.
c.) Broker: One whose business is to act as intermediary between 2 other parties.
d.) Factor: One whose business is to receive and sell goods for a commission, being entrusted with the possession of the goods involved in the transaction. f. Attorney-in-fact: One who is given authority by his principal to do a particular act not of a legal character.
General agent
All acts connected w/ the business in which he is engaged.
Special agent
Only one or more specific acts in pursuance of particular instructions or w/ restrictions necessarily implied from the act to be done. Single transaction or a series of transactions not involving continuity of service. Cannot in a manner beyond or outside the specific acts w/c he is authorized to perform Termination effective as to 3rd party unless agency was for purpose of contracting w/ that 3rd party.
Series a transactions involving a continuity of service. By an act within the scope of his authority although it may be contrary to his special instructions Apparent authority does not terminate by mere revocation of authority w/o notice to 3rd parties.
Termination of authority
Construction of
Merely
Strictly construed.
instructions of principal
advisory.
Art. 1877. An agency couched in general terms comprises only acts of administration, even if the principal should state that he withholds no power or that the agent may execute such acts as he may consider appropriate, or even though the agency should authorize a general or unlimited management.
Agency couched administration. in general terms covers only acts of
A general power permits an agent to do all acts for which the law does not require a special power (Dominion Insurance Corp v. CA, 376 SCRA 244).
Examples of acts of mere administration: 1.) To sue for collection of debts; 2.) To employ workers or servants and employees needed for the conduct of business; 3.) To engage counsel to preserve the ownership and possession of the principals property;
4.) To lease real property to another person for 1 year or less, provided the lease is not registered;
5.) To make customary gifts for charity or to employees in the business managed by the agent 6.) To borrow money if it be urgent and indispensable for the preservation of the things under administration.
In case of doubt, resort must be had to the situation, surroundings and relations of the parties. The intention of the parties must be sustained rather than defeated. So if the contract be open to 2 constructions, one of which would uphold the intention while the other would overthrow it, the former is to be chosen.
Art. 1878. Special powers of attorney are necessary in the following cases:
1.) To make such payments as are not usually considered as acts of administration;
2.) To effect novations which put an end to obligations already in existence at the time the agency was constituted;
3.) To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired;
6.) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent; 7.) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration; 8.) To lease any real property to another person for more than one year; 9.) To bind the principal to render some service without compensation; 10.) To bind the principal in a contract of partnership; 11.) To obligate the principal as a guarantor or surety;
13.) To accept or repudiate an inheritance; 14.) To ratify or recognize obligations contracted before the agency; 15.) Any other act of strict dominion.
Art. 1879. A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell.
The power to sell is different from the power to mortgage in same way that the latter is different from the power to contract loans. The following are included in a Power to Sell: The power to: 1.) Find a purchaser or to sell directly; 2.) Deliver the property; 3.) Make the usual representation and warranty; 4.) Execute the necessary transfer documents;
5.) Fix the terms of the sale unless there be set conditions stipulated by the principal;
6.) Sell only for cash; 7.) Receive the price unless he was authorized only to solicit orders.
The following are not included in a Power to Mortgage The power to: 1.) Sell;
Does the principal have the power to revoke a contract giving an agent exclusive authority to sell?
YES. But he may not have the right to use such power if he has agreed not to exercise such power during a certain period. In case he fails to comply with this obligation-not-to-do, he will be liable for damages.
Art. 1880. A special power to compromise does not authorize submission to arbitration.
Rationale:
A principal may authorize his agent to compromise because of absolute confidence in the latters judgment and discretion to protect the formers rights and obtain for him the best bargain in the transaction. If the transaction would be left in the hands of an arbitrator, said arbitrator may not enjoy the trust of the principal.
Art. 1881. The agent must act within the scope of his authority. He may do such acts as may be conducive to the accomplishment of the purpose of the agency. Authority: The power of the agent to affect the legal relations of the
principal by acts done in accordance with the principals manifestation of consent to him.
It is the power of the agent to act within the scope of his assignment on behalf of his principal with binding effect on the latter.
The authority of the agent is the very essence sine qua non of the principal and agent relationship. This authority, unless it is otherwise agreed, includes only the authority to act for the benefit of the principal, and the source of the authority is the principal and never the agent.
Kinds of Authority:
1.) Actual: when it is actually granted, and it may be express or implied. It results from what the principal indicates to the agent. 2.) Express: when it is directly conferred by words. 3.) Implied: when it is incidental to the transaction or reasonably necessary to accomplish the purpose of the agency, and therefore, the principal is deemed to have actually intended the agent to possess. 4.) Apparent or Ostensible: when it is conferred by words, conduct or even by the silence of the principal which causes a 3rd person reasonably to believe that a particular person, who may or may not be the principals agent, has actual authority to act for the principal. Ostensible authority is another name for authority by estoppel.
5.) General: when it refers to all the business of the principal. 6.) Special: when it is limited only to one or more specific transactions. 7.) By necessity or by operation of law: when it is demanded by virtue of the existence of an emergency; it terminates when the emergency has passed.
the agent is empowered to perform the act authorized to be done. Authority? With authority With authority Without Without Whose behalf? Principals Own Principals Own Status of Transaction Valid Depends. [1883 ] Unenforceable Valid
Who to sue?
In case the agent acts in the name of the principal and within his scope of authority, you must name the principal as the defendant.
Note: The authority to look for buyers does not carry with it the authority to sell.
Art. 1882. The limits of the agents authority shall not be considered exceeded should it have been performed in a manner more advantageous to the principal than that specified by him. What happens if the agent exceeds his authority but he performs the agency in a manner more advantageous to the principal? It will be as if he did not exceed the limits of his authority since he must do such acts as may be conducive to the accomplishment of the purpose of the agency.
Example: the agent is authorized to sell cell phones by instalment, but he was able to sell it in cash.
Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent contracted; neither have such persons against the principal.
In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal.
The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. Kinds of Principals:
1.) Disclosed: if at the time of the transaction contracted by the agent, the other party thereto has known that the agent is acting for a principal and has known the principals identity. 2.) Partially disclosed: if the other party knows or has reason to know that the agent is or may be acting for a principal but is unaware of the principals identity. The partially disclosed principal may enforce against the 3rd person the contract of the agent like any disclosed principal. Similarly, the 3rd person has a right of action against the principal.
3.) Undisclosed: if the party has no notice of the fact that the agent is acting as such for a principal.
2.) He act in his own name not in the name or representation of the principal
May the agent who is directly bound sue on his own name?
When the agent transact business in his own name for the benefit of an undisclosed principal, he may sue or be sued, in his individual capacity there being no action for or against the undisclosed principal.
Remedy of the 3rd person with whom the agent contracted in case the obligation is not complied with:
If the case falls under the general rule, he can sue the agent. But when the contract involves things belonging to the principal, he can sue the principal. But if it cannot be determined w/o litigation who is liable, he can sue both.