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ATENEOCENTRAL BAROPERATIONS 2007
Civil Law
SUMMER REVIEWER
LAWONAGENCY
CHAPTER 1:NATURE, FORMAND KINDS OF
AGENC
Y
Contract of
Agency is a
contract whereby a
person binds
himself to render
some service or to
do something in
representation or
on behalf of
another, with the
consent or authority
of the latter. (Art.
1868)
Characteristics:1. Consensual2. Nominate3. Preparatory4. Principal
5. Unilateral;Bilateral (ifagency isforcompensation)
Nature: Since it is a
contract there must
be ameeting of the
minds as to consent,
object, and cause.
Exception tocontractualnature: entheagencyiscreatedbyoperationoflaw
Ex:AgencybyEstoppel
Basis:
0 Representation: The acts ofthe agent onbehalf of theprincipal withinthe scope of hisauthorityproduce thesame legal andbinding effectsas if they werepersonally doneby the principal.
0 Hence, thedistinguishingfeatures of agency are itsrepresentativecharacter & itsderivativeauthority.
Purpose: Extend the
personality of the
principalthrough the
facility of the agent
Capacity of theParties:
Principal QuickTime and aTIFF (Uncompressed) decompressor
are needed to see this picture.a. He may be a natural or a juridical person
b. He must be capacitated. The rule is ifa
person is capacitated to act for himself orhis own right, he can act through an
agent.
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i.
2. Agent
1. Ins
ofarasthet
hirdpersons
areconcerned,
itisen
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oughthattheprinci
paliscapacit
ated.
2. Insofar
ashisob
ligationstohispri
ncipalareco
ncerned,the
agentmust
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beabletobindhim
self.
3. B
u
t
a
s
an
a
g
e
n
t
,
s
o
me
m
e
n
t
a
l
c
a
p
a
c
i
t
y
i
s
n
e
c
e
s
s
a
r
y,
s
o
,
t
h
o
s
e
w
h
o
a
r
e
a
b
s
o
lu
t
e
l
y
i
n
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c
a
p
a
c
i
ta
t
e
d
(
e
x
.
I
n
sa
n
e
p
e
r
s
o
n
s
)
c
a
n
n
o
t
b
e
a
ge
n
t
s
.
EssentialElements:
1. Consentof theparties toestablish therelationship;
2. Object of thecontract is theexecution of a
juridical act inrelation to thirdpersons;
3. Agent acts as arepresentativeand not for himself; and
4. Agent actswithin thescope of hisauthority.
Orient Air Services v.
CA, G.R. No. 76931,May 29, 1991
An illegal terminationof agency does not
justify reinstatement ofthe agent as such. Theagency cannot becompelled by the courtsto be reinstated because suchrelationship can only beeffected with theconsent of the principal.
Acts That Cannot BeDone By Agent:1. Personal Acts ex. Making of awill
2. Criminal or Illegal Acts
Nature of Relationshipbetween Principal and
Agent:Fiduciary - based ontrust & confidence
1. Agent isestopped from
assertinginterest adverseto his principal2. Agent must notact as anadverse party
3. Agent must notact for anadverse party
4. Agent must notuse or disclosesecretinformation
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5. Agent mustgive noticeof materialfacts
0 Knowledgeofthe
agentisim
putedtothe
princ
ipaleven
though
theagent
nevercommunicated
Excepti
ons:1. W
heretheinterestsofthe
agentar
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2.
e
t
h
e
p
e
r
s
o
n
c
l
a
i
mi
n
g
t
h
e
b
e
n
ef
i
t
o
f
Adviser: Dean Cynthia Roxas-Del Castillo; Heads:
Joy Marie Ponsaran, Eleanor Mateo ;
Understudies: Joy StephanieTajan, John Paul
Lim; Subject Head: Thea Jimenez; Pledgees:Naealla Rose Bainto, Sandra May Maclang
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the rule colludes with theagent to defraud the
principal.
Distinction between Agency & Lease of Service
AgencyLease ofService
Representation EmploymentAgent exercises Lessor ordinarilydiscretionary powers performs only ministerial
functions3 persons are involved: 2 persons are involved:principal, agent and the lessor and lessee
3rd person with whom the
agent contractsRelates to commercial Relates more to theor business matters of mere manualtransactions or mechanical
execution
Distinction between Agency & Guardianship
Agency GuardianshipAgent represents a A guardian represents ancapacitated person incapacitated person.Agent is appointed by Guardian is appointedthe principal and can be by the court and standsremoved by the latter. in loco parentis.Agent is subject to the Guardian is not subject todirections of the principal. the directions of the ward
but must act for thebenefit of the latter
Agent can make the Guardian has no power principal personally to impose personalliable. liability on the ward.
Distinction between Agency & Lease of Property
Agency Lease of propertyAgent is controlled bythe Lessee is not controlledprincipal. by the lessor.Agency may involve Lease of propertythings other than involves property.property.Agent can bind the Lessee cannot bind theprincipal. lessor.
QuickTime and aDistinction between Agency to Sell & Sale
TIFF (Uncompressed) decompressor
areto this picture.
Agency to sell Sale
Agent receives thegoods Buyer receives the goodsas the principals goods as ownerAgent delivers the Buyer pays the priceproceeds of the saleAgent can return the Buyer, as a general rule,object in case he is cannot return the object
unable to sell the same sold
to a third person
Agent in dealing with the Buyer can deal with thething received is bound thing as he pleases,
to act according to the being the ownerinstructions of hisprincipal
Distinction between Agent & Contractor
Agent Independent Contractor Represents his principal Employed by the
employerActs under the principals Acts according to his owncontrol and instruction methodPrincipal is liable for torts Employer not liable forcommitted by the agent torts committed by thewithin the scope of his independent contractor.authority
Distinction between Agency and Partnership
Agency PartnershipAn agent must submit to A co-partner is notthe principals right to subject to co-partnerscontrol right to control, unless
there is an agreement tothat effect
The agent assumes no The partner binds notpersonal liability where only the firm membershe acts within the scope but himself as wellof his authorityThe agent takes his The profits belong to allagreed share of profits the partners as commonnot as owner but as an proprietors in agreedagreed measure of proportionscompensation for hisservices
Art. 1869.Agency may be express, or implied fromthe acts of the principal, from his silence or lack ofaction, or his failure to repudiate the agency,knowing that another person is acting on his behalfwithout authority.
Agency may be oral, unless the law requires a
specific form. (1710a)
Classifications of Agency
1. As to manner of creation1. Express agent has been actually
authorized by the principal, either orallyor in writing
2. Implied agency is implied from the
acts of the principal, from his silence orlack of action or his failure to repudiate
the agency knowing that
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another person is acting on his behalfwithout authority, or from the acts of theagent which carry out the agency, or fromhis silence or inaction according to thecircumstances
2. As to character1. Gratuitous agent receives nocompensation for his services
2. Onerous agent receivescompensationfor his services
3. As to extent of business of the principal1. General agency comprises all the
business of the principal2. Special agency comprises one ormore
specific transactions4. As to authority conferred
1. Couched in general terms agency iscreated in general terms and is deemedto comprise only acts in the name and
representation of the principal.2. Simple or Commission agentacts in
his own name but for the account of the
principal.
Forms of Agency:
General Rule: Appointment of an agent may be oralorwritten; no formal requirements
Exception: When the law requires a specificform (ex. agents sale of real property or anyinterest therein)
Art. 1875. Agency is presumed to be for acompensation, unless there is proof to the contrary.
(n)
0 The agent does not have to prove that theagency is for compensation.
0 But, theprima facie presumption that the agency
is for a compensation may be contradicted by
contrary evidenceQuickTime and a
Broker: NegotiateTIFFcontracts(Uncompressed) decompressorrelative to property inare needed to see this picture.
behalf of others and for a compensation/fee
When Broker Entitled to Compensation:0 Whenever he brings to his principal a party who
is able and willing to take the property, and enterinto a valid contract upon the terms named by theprincipal, although the particulars may bearranged and the matter negotiated andcompleted between the principal and the
purchaser directly
However, a broker is never entitled to commission for
unsuccessful efforts.
Manotoc Brothers, Inc. v. CA,221 SCRA 224 [1993]
The broker should be paid his commission where he isthe efficient procuring cause in bringing the sale.Efficient procuring cause: when there is a closeproximate and causal connection between the efforts andlabor of the agent and the principals sale of property.
Law on Double Agency:
Disapproved by law for being against public policy andsound morality EXCEPTwhere the agent acted withfull knowledge and consent of the principals
Right of agent to compensation in case of doubleagency:
1. With knowledge of both principals -recoverycan be had from both principals
2. Without the knowledge of both principals- the agent can recover from neither
3. With knowledge of one principal - as to theprincipal who knew of that fact and as to theagent, they are inpari delicto and the courts shallleave them as they were, the contract betweenthem being void as against public policy andgood morals
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 tothe circumstances. (n)
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. (n)
Art. 1872. Between persons who are absent, theacceptance of the agency cannot be implied from thesilence of the agent, except:1. When the principal transmits his power ofattorney to the agent, who receives it withoutany 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 habituallyengaged as an agent, and he
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did not reply to the letter or telegram. (n)
Forms of Acceptance by Agent:
1. Express - when it is oral or written
2. Implied -when it can be inferred from theacts ofthe agent which carry out the agency, or from hissilence of inaction according to thecircumstances
1. Between persons who are present implied acceptance if the principaldelivers his power of attorney to theagent and the latter receives it withoutany objection
2. Between persons who are absent acceptance not deemed impliedfrom thesilence of the agent.Exceptions:
1. Whentheprincipaltransmits hispowerofattorney totheagentwhoreceive
s itwithoutanyobjection
2. Whentheprincipalentrusts tohim byletter or
telegram apowerofattorney withrespectto thebusiness inwhichhe is
habituallyengagedas anagent,and he didnot replyto theletter ortelegram
What is meant by present?Generally, face to face, but includes people
conversing directly through technology (ex. over thetelephone).
Power of Attorney: Instrument in writing by which oneperson, as principal, appoints another as his agent andconfers upon him the authority to perform certain specifiedacts or kinds of acts on behalf of the principal; primarypurpose is to evidence agents authority to third partieswithin whom the agent deals
Construction of Power of Attorney:
General Rule:Strictly construed and strictly pursued;heldto grant only those specified powers
Exception: when strict construction will destroythe very purpose of the
QuickTimepower
and a
TIFF (Uncompressed) decompressor areneeded to see this picture.
Art. 1873. If a person specially informs another orstates by public advertisement that he has given a
power of attorney to a third person, the latter therebybecomes a duly authorized agent, in the former casewith respect to the person who received the specialinformation, and in the latter case with regard to any
person.
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The power shall continue to be in full force
until the notice is rescinded in the same manner in
which it was given. (n)
Way of Giving Notice of Agency & Its Effect:1. By special information - the personappointed
as agent is considered such with respect tothe person to whom it was given.
2. By public advertisement - the agent is
considered such with regard to any person
How do you revoke an agency?
In the same manner as it was constituted.However, constitution by Special Information may berevoked by notice in a daily newspaper, provided it
can be proven that 3rd persons in question read therevocation
What is an 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.
Distinction between Agency by Estoppel and
Implied Agency
y Implied Agency
Estoppel
Existence There is an actual
of actual No agency at all
agencyagency
Can be invoked
only by a 3rd
Reliance by person who in Such reliance in3rd persons good faith relied
on the conduct of not needed, sincethe agent is a real
the principal in
agentholding the agent
out as being
authorized
An agent byestoppel has
none of the rights An agent byNature of of an agent, implied
Authority except where the appointment has
principals all the rights andconduct are such liabilities of an
that the agent agent, i.e. has
reasonably actual authority to
believed that the act on behalf of
principal intended the principal
him to act as an
agent
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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. (n)
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. (1712)
Art. 1877. An agency couched in general termscomprises only acts of administration, even if the
principal should state that he withholds no power orthat the agent may execute such acts as he mayconsider appropriate, or even though the agencyshould authorize a general and unlimitedmanagement. (n)
Will an authority embodied in a letter be sufficient?Yes. (Jimenez v. Rabot, 38 Phil 387 [1918])
Attorney-In-Fact:0 One who is given authority by his principal to do
a particular act not of a legal character
0 The term is, in loose language, used to includeagents of all kinds, but in its strict sense, itmeans an agent having a special authoritycreated by a deed.
Distinctions between a General Agent and a SpecialAgent
General Agent Special AgentScope of All acts Specific acts in
connected with pursuance of Authority the business or particular
employment in instructions or which he is with restrictionsengaged necessarily
implied from theact to be done
Nature of Involves No continuity of QuickTime
TIFF (Uncompressed) dService continuity of service
are needed to see this
Authorized serviceMay bind his Can not bind his
principal by an principal in aExtent to act within the manner beyond orWhich scope of his outside theAgent May authority specific actsBind the although it may which he isPrincipal be contrary to the authorized to
latters special perform
instructions
Apparent Duty imposedauthority does upon the third
not terminate by party to inquireTermination the mere makesof Authority revocation of his termination of the
authority without relationship asnotice to the third between the
party principal and
agent effective asto such third partyunless the agency
has beenentrusted for the
purpose ofcontracting withsuch third party
Construction Merely advisory Strictly construedof in nature as they limit thePrincipals agents authorityInstructions
Agency Couched in General Terms: Covers only
MERE ACTS OF ADMINISTRATION even if:
1. The principal should state that he withholds nopower
2. The agent may execute such acts as he mayconsider appropriate
3. The agency should authorize a general and
unlimited management
How are contracts of agency construed?
Contracts of agency, as well as general powers ofattorney, must be interpreted in accordance with
the language used by the parties.0 The real intention of the parties is primarilydetermined from the language used andgathered from the whole instrument.
0 In case of doubt, resort must be had to thesituation, surroundings ad relations of theparties. The intention of the parties must besustained rather than defeated.
0 So if the contract be open to constructions, oneof which would uphold the intention while theother would overthrow it, the former is to bechosen.
Art. 1878 .Special powers of attorney arenecessary
in the following cases:
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1. To make such payments as are not usually
considered as acts of administration;
2. To effect novations which put an end toobligations already in existence at the time
the agency was constituted;3. To compromise, to submit questions toarbitration, to renounce the right to appealfrom a judgment, to waive objections to thevenue of an action or to abandon a
prescription already acquired;4. To waive any obligation gratuitously;5. To enter into any contract by which the
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration;
6. To make gifts, except customary ones forcharity or those made to employees in thebusiness managed by the agent;
7. To loan or borrow money, unless the latteract be urgent and indispensable for the
preservation of the things which are underadministration;
8. To lease any real property to anotherperson for more than one year;
9. To bind the principal to render someservice without compensation;
10. To bind the principal in a contract ofpartnership;
11. To obligate the principal as a guarantor orsurety;
12. To create or convey real rights over
immovable property;13. To accept or repudiate an inheritance;14. To ratify or recognize obligations
contracted before the agency;15. Any other act of strict dominion. (n)
Art. 1879.A special power to sell excludes thepower
to mortgage; and a special power to mortgage does
not include the power to sell. (n)
Art. 1880.A special power to compromise doesnot
authorize submission to arbitration. (1713a)
QuickTime and a TIFF
(Uncompressed) decompressorare needed seethis picture.
Special Power of Attorney: an instrument in writingbywhich one person, as principal, appoints another as hisagent and confers upon him the authority to performcertain specified acts or kinds of acts on behalf of theprincipal.
The special power of attorney can be included inthe general power when it specifies therein theact or transaction for which the special power isrequired.
Powers Not Included in the Power to Mortgage:1. To sell2. To execute a second mortgage
3. To mortgage for the agents or any 3rd personsbenefit, UNLESS clearly indicated
Powers Not Included in the Power to Compromise
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 formersrights and obtain for him the best bargain in thetransaction.
0 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 ofhis
authority. He may do such acts as may be conducive
to the accomplishment of the purpose of the agency.(1714a)
Art. 1882.The limits of the agent's authority shallnot
be considered exceeded should it have been
performed in a manner more advantageous to the
principal than that specified by him. (1715)
Art. 1883 . If an agent acts in his own name, theprincipal has no right of action against the personswith whom the agent has contracted; neither havesuch persons against the principal.
In such case the agent is the one directly boundin favor of the person with whom he has contracted,as if the transaction were his own, except when thecontract 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. (1717)
Requisites for Principal to be Bound by Act of Agent:1. The agent must act in behalf of the principal2. The agent must act within the scope of his
authority
When a principal NOT BOUND by act of agent:1. The latter acts without or beyond the scope of hisauthority in the formers nameExceptions:
1. Where the acts of the principal have
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contributed to deceive a 3rd person ingood faith;
2. Where the limitations upon the powercreated by the principal could not havebeen known by the 3rd person;
3. Where the principal has placed in thehands of the agent instruments signed byhim in blank;
4. Where the principal has ratified the actsof the agent
2. The latter acts within the scope of his authority
but in his own name, EXCEPT when the
transaction involves things belonging to the
principal
Jesus M. Gozun v. Jose Teofilo T. Mercado a.k.a.Don Pepito Mercado, G.R. No. 167812 (19
December 2006)
Facts:In the 1995 elections, Don Pepito vied for thegubernatorial post in Pampanga. The latters wifetransacted with Gozun, the owner of JMG PublishingHouse, for the printing of campaign paraphernalia. DonPepitos wife had told Gozun that the former has alreadygiven his approval and that the latter could already startprinting. Gozun thereafter availed of the services of twoother publishing houses to be able to meet the deadline.The printed materials were then delivered to Don Pepitosheadquarters.
Meanwhile, Don Pepitos sister-in-law, Lilian Soriano,obtained from Gozun a cash advance allegedly for theallowances of poll watchers. Lilian acknowledged onpetitioners 1995 Diary receipt of the amount withoutthereby indicating that she was obataining such amounton behalf of Don Pepito.
Gozun sent a Statement of Account for the printing,including the amount due the other publishing housesplus the amount of the loan given to Lilia. Don Pepitoswife made a partial payment to Gozun. Despite repeateddemands, respondent failed to settle the balance. Hence,a collection case was instituted by Gozun.Issue: Whether or not Don Pepito should be held
QuickTime and a
liable for the amount?TIFF(Uncompressed) decompressorare needed to see this picture.
Held: The loan obtained by Lilia cannot be collectedfromDon Pepito, but the cost of campaign materials is
properly collectible.
By the contract of agency, a person binds himself to
render some service or to do something in representation
or on behalf of another, with the
consent or authority of the latter. Contracts entered into inthe name of another person by one who has been givenno authority or legal representation or who has actedbeyond his powers are classified as unauthorizedcontracts and are declared unenforceable, unless ratified.
Generally, the agency may be oral, unless the lawrequires a specific form. A special power of attorney isnecessary for an agent to, as in this case, borrow money,unless it is urgent and indispensable for the preservationof the things which are under administration. Sincenothing in this case involves the preservation of thingsunder administration, a determination of whether Sorianohad the special authority to borrow money on behalf ofrespondent is in order.
In the case at bar, there was not enough evidenceestablishing that the loan was made on behalf of DonPepito. Gozuns testimony, during trial, failed tocategorically state whether the loan was on behalf of the
respondent or his wife. The receipt signed by Lilianwas also in her name alone, withoutindicating that shewas acting on behalf of Don Pepito; she thus boundherself in her personalcapacity and not as an agent ofthe respondent oranyone for that matter.
As to the issue on whether or not Gozun can collect thecost of the printing due to the other publishing houses,the Court held that Gozun is the real party in interestinsofar as the recovery of the cost of campaign materialsis concerned. The Court was not persuaded by DonPepitos theory that the campaign materials delivered tohim were donations from his friends and supporters; if so,such fact should have been printed on the face of thematerials as required by the Comelec rules.
NOTE: The agent is not deemed to have exceeded thelimits of his authority should he perform the agency in amanner more advantageous to the principal than thatindicated by him, since he is authorized to do such actsas may be conducive to the accomplishment of thepurpose of the agency.
CHAPTER 2: OBLIGATIONS OF THE AGENT
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Art. 1884. The agent is bound by his acceptance tocarry out the agency, and is liable for the damageswhich, through his non-performance, the principalmay suffer.
He must also finish the business already begun
on the death of the principal, should delay entail anydanger. (1718)
Art. 1885. In case a person declines an agency,he isbound to observe the diligence of a good father of afamily in the custody and preservation of the goodsforwarded to him by the owner until the latter shouldappoint an agent or take charge of the goods. (n)
Art. 1886.Should there be a stipulation that theagent
shall advance the necessary funds, he shall be
bound to do so except when the principal is
insolvent. (n)
Art. 1887. In the execution of the agency, the agentshall act in accordance with the instructions of the
principal.In default thereof, he shall do all that a good father of
a family would do, as required by the nature of the
business. (1719)
Art. 1888. An agent shall not carry out an agency if
its execution would manifestly result in loss or
damage to the principal. (n)
Art. 1889. The agent shall be liable for damages if,there being a conflict between his interests and those
of the principal, he should prefer his own.(n)
Art. 1890. If the agent has been empowered toborrow
money, he may himself be the lender at the current
rate of interest. If he has been authorized to lend
money at interest, he cannot borrow it without the
consent of the principal. (n)
Art. 1891. Every agent is bound to render anaccountof his transactions and to deliver to the principalwhatever he may have received byvirtue of the agency, even
QuickTimethough
andait may not be
TIFF (Uncompressed) decompressor
owingto the principalareneeded.to see this picture.Every stipulation exempting the agent from the
obligation to render an account shall be void. (1720a)
Art. 1896. The agent owes interest on the sumshe
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. (1724a)
Art. 1897. The agent who acts as such is not
personally liable to the party with whom he contracts,
unless he expressly binds himself or exceeds the
limits of his authority without giving such party
sufficient notice of his powers. (1725)
Obligations of the Agent to the Principal
1. General:1. Act with utmost good faith &
loyalty for the furtherance ofprincipals interests
2. Obey principals instructions3. Exercise reasonable care
2. Specific:
1. Carry out the agency2. Answer for damages which
through his non-performance the
principal may suffer3. Finish the business already
begun on the death of theprincipal should delay entail anydanger (exception to the rule thatdeath extinguishes agency)
4. Observe the diligence of a goodfather in the custody andpreservation of the goodsforwarded to him by the owner incase he declines an agency, untilan agent is appointed
5. Advance necessary funds if there
be a stipulation to do so (exceptwhen the principal is insolvent)6. Act in accordance with the
instructions of the principal, andin default thereof, to do all that agood father of a family would do
Exceptions (to the rule that the agentmustnot depart from the instructions of principal):
1. Theres asuddenemergency
2. If the instructionsare ambiguous
3. If the departureis soinsubstantial thatit does not affectthe result andthe principalsuffers nodamage thereby
7. Not to carry out the agency if itwould manifestly result in lossor damage tothe principal
8. Answer for damages if therebeing a conflict between his &
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principals interests, he prefershis own
9. Not to loan to himself if he hasbeen authorized to loan moneyat interest
10. Render an account of his
transactions and deliver to the
principal whatever he
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mayhave
received byvirtueof theagency (If theagentfails todeliverandinstead
converts or appropriatesfor hisownusethemoneyorpropertybelong
ing tohisprincipal, hemaybechargedwithESTAFA.)
3. When an agent byhis act prevents
performance on
the part of the
principal
4. When aperson actsas an agentwithoutauthority orwithout aprincipal
5. A person whopurports to actas agents ofanincapacitatedprincipal
11. Be
responsible
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incertain
casesfortheactofthes
ubstituteappo
intedbyhim
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12. Pay interest on funds he hasapplied to Art. 1892. The agentmay appoint a substitute if
hisownuse
Distinctions
between
Authority and
the Principals
Instructions
thority InstructionsSum total of the powerscommitted to the agentby the principal
Relates to thesubject/business withwhich the agent isempowered to deal or actLimitations of authority
are operative as againstthose who have/chargedwith knowledge of themContemplated to bemade known to thirdpersons dealing with theagent
When agenthas a right todisobey the
principalsinstructions:
1. When theinstruction callsfor theperformance ofillegalacts
2. Where
he is
privilege
d to do
so to
protect
his
security
in the
subject
matter
of the
agency
When obligationto account not
applicable:1. If the agentacted onlyas amiddlemanwith thetask of merelybringingtogether thevendor andthevendees.2. If the agent
had informedthe principalof the
gift/bonus/profihe received from the
QuickTime and aTIFF (Uncompressed) decompressor
purchaser and his pr incipal did not ob ject
thereto. areneeded to see this picture.3. Where a
right of lien
exists in
favor of the
agent.
When agent mayincur personal
liability?1. When theagentexpresslybinds himself2. When the
agentexceeds hisauthority
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the principal hasnot prohibitedhim from doingso; but he shallbe responsiblefor the acts ofthe substitute:
1. When hewas notgiven the
power toappointone;
2. When hewasgivensuch
power,butwithoutdesignating the
person,
and thepersonappointed wasnotoriouslyincompetent or insolvent.
All acts of the
substitute
appointed
against the
prohibition of theprincipal shall be
void. (1721)
Art. 1893. In the
cases mentioned
in Nos. 1 and 2of
the preceding
article, the
principal may
furthermore
bring an action
against the
substitute withrespect to the
obligations
which the latter
has contracted
under the
substitution.
(1722a)
Appointment ofSub-agent:
1. If the principalhas notprohibited theagent fromappointing asubstitute, hewill be liable
to 3rdpersons forthe acts of thesub-agent
within thescope of hisauthority
2. If there is aprohibition butneverthelessthe agentappoints asubagent, allthesubagentsacts are voidas to theprincipal.
3. If there isauthority toappoint andsubagent isnotdesignated bythe principal,the agent willbe liable for allthe acts of thesubagent if the subagentis notoriously
incompetentor insolvent.
4. If there isauthority toappoint andsubagent isdesignated bythe principal,the agent isreleased fromany liabilityfrom the actsof the
subagent.5. If theappointmentof a sub-agentis notauthorized butnot prohibited,it shall bevalid if it isbeneficial tothe principal.But, should
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theprincipalincurdamagedue tosuchappointment, theagent shallbeprimarilyresponsibl
e for the actsof thesubstitute.
Art. 1894. The
responsibility of two
or moreagents,even though they
have been appointed
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simultaneously, is not solidary, if solidarity has not
been expressly stipulated. (1723)
Art. 1895.If solidarity has been agreed upon,each ofthe agents is responsible for the non-fulfillment of
agency, and for the fault or negligence of his fellowsagents, except in the latter case when the fellowagents acted beyond the scope of their authority. (n)
Responsibility of 2 or More Agents AppointedSimultaneously:General Rule: Liable jointly
Exception: Solidarity has been expresslystipulated;each of the agents becomes solidarily liable for (1)the non-fulfillment of the agency; of for (2) the fault ornegligence of his fellow agent
Exception to the exception: when one of theother agent/s acts beyond the scope of hisauthority innocent agent is NOT liable
Art. 1898. If the agent contracts in the name of theprincipal, exceeding the scope of his authority, andthe principal does not ratify the contract, it shall bevoid if the party with whom the agent contracted isaware of the limits of the powers granted by the
principal. In this case, however, the agent is liable ifhe undertook to secure the principal's ratification. (n)
Art. 1899. If a duly authorized agent acts in
accordance with the orders of the principal, the latter
cannot set up the ignorance of the agent as tocircumstances whereof he himself was, or ought to
have been, aware. (n)
Art. 1900 .So far as third persons are concerned,anact is deemed to have been performed within thescope of the agent's authority, if such act is withinthe terms of the power of attorney, as written, even ifthe agent has in fact exceeded the limits of hisauthority according to anunderstanding between the principal and the
QuickTime and a agent. (n)TIFF (Uncompressed) decompressor
are needed to see this picture.
Art. 1901.A third person cannot set up the fact thatthe agent has exceeded his powers, if the principal
has ratified, or has signified his willingness to ratify
the agent's acts. (n)
Art. 1902.A third person with whom the agentwishes
to contract on behalf of the principal may require the
presentation of the power of attorney,
or the instructions as regards the agency. Private or
secret orders and instructions of the principal do not
prejudice third persons who have relied upon the
power of attorney or instructions shown them. (n)
Art. 1909. The agent is responsible not only forfraud,but also for negligence, which shall be judged with
more or less rigor by the courts, according to
whether the agency was or was not for a
compensation. (1726)
Effect where 3rd person aware of limits of agents
power: If the agent exceeds his authority, it shall beVOID unless the principal ratifies it.
DOCTRINE OF AGENCY BY NECESSITY: actually,anagency can never be created by necessity; what iscreated is additional authority in an agent appointed andauthorized before the emergency arose. The existence ofemergency or other unusual conditions may operate toinvest in an agent authority to meet the emergency,provided: (PURE)
1. The agents enlarged authority is exercised forthe principals protection
2. The agent is unable to communicate withprincipal;
3. The means adopted are reasonable under thecircumstances;
4. The emergency really exists;
When 3rd person repudiate the contract
Before actual ratification by the principal, or before theprincipal has signified his willingness to ratify the
agents acts.
Effect of the principal receiving the benefits ofthe transaction:
0 He is deemed to have ratified it. A principal may
not accept the benefits of a transaction and at the
same time repudiate its burdens
Conditions for Ratification
1. The principal must have capacity and power toratify
2. He must have had knowledge of material facts3. He must ratify the acts in its entirety4. The act must be capable of ratification5. The act must be done in behalf of the principal
0 To be effective, ratification neednot be communicated or made
known to the agent or the thirdparty. The act or
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cond
uct of
theprinci
pal
rather
than
his
com
muni
catio
n is
the
key.
Butbefor
e
ratific
ation,
the
third
party
is
free
to
revok
e the
unauthoriz
ed
contr
act.
Effects ofRatification1. Withrespectto agent- relievesthe agentfromliability tothe thirdparty fortheunauthorizedtransaction, and tohisprincipalfor actingwithoutauthority;mayrecovercompensation
2. Withrespecttoprincipal
-assumesresponsibility fortheunauthorized act,as fullyas if theagenthadacted
under originalauthority butnot liable foracts outsidethe authorityapproved byhis ratification
3. With respectto 3rd persons- bound byratification tothe sameextent as if theratified act hadbeenauthorized;cannot raisethe question
of the agentsauthority to do theratified act
4.
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Robinson v.Borse
Ratification isspelled out whenthe principal brings legal
proceedings toenforce thecontract enteredinto by theunauthorizedagent, subject toqualification,however, that thebringing of legal
proceedings is notdeemed ratificationwhere the principalsaction is undertaken toavert a greater lossrather than to assert again.
NOTE: Agent alwaysliable for fraudbut not
for negligence, which
shall be judged withmore or less rigor by
the courts, accordingto whether the agency
was or was not forcompensation.
Effect Exception(s)1. Binds principal; Agent liable if he:
In behalf of the principal, 2. Agent not personally liable 1. Expressly makes himself liablewithin the scope of authority 2. Exceeds the limits of his authority
without giving the parties sufficientnotice of his powers
Contract is unenforceable as against Binding on the principal when:Without or beyond scope of 1. Ratified or
the principal but binds the agent toauthority 2. The principal allowed the agent to act
the third personas though he had full powers
Within the scope of authority 1. Not binding on the principal; When the transaction involves thingsbelonging to the principal:
but in the agents name 2. Principal has no cause of action 1. Remedy of the principal - damages for
against the 3rd parties and vice agents failure to comply with theversa agency
2. Remedies of the third person If the case falls under the general rule,
he can sue the agent.
But when the contract involvesthingsbelonging to the principal, he cansuethe principal.
But if it cannot be determinedwithoutlitigation who is liable, he can sue both.
Within the scope of the 1. Insofar as 3rd persons areQuickTim awritten power of attorneyTIFF(Uncompressed)but sorconcerned (not required to
are needed to seepicture.
agent has actuallyexceeded inquire further than the terms of
his authority according to an the written power, agent acted
understanding between him &within scope of hisauthority;
the principal 2.Principalestopped
With improper motivesMotive is immaterial; as longas 1. Third person knew agent was acting for
his own benefit: principal is not liable towithin the scope of authority, valid 3rd third
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person
2. Owner is seeking recovery of personalproperty of which he has been
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unlawfully deprived
1. Authorized - principal still liable2. Beyond the scope of the agents
With misrepresentations by authoritythe agent General Rule: Principal not
liable
Exception:principal takes
advantage of a contractorreceives benefits made underfalse representation of hisagent
3. For the agents own benefitprincipal still liable; agents motiveimmaterial
Mismanagement of the 1. Principal still responsible for theacts contracted by theagent
business by the agent with respect to 3rd persons;
2.Principal, however, may seekrecourse from the agent
Principal civilly liable so long as theTort committed by the agent tort is committed by the agent while
performing his duties in furtheranceof the principals business
Agent in good faith butPrincipal is liable fordamages
prejudices 3rd partiesAgent in bad faith and Only the agent is liable for damages
prejudices 3rd persons
Art. 1903. The commission agent shall be responsible for the goods
received by him in the terms and conditions and as described in the
consignment, unless upon receiving them he should make a written
statement of the damage and deterioration suffered by the same. (n)
Art. 1904 .The commission agent who handlesgoods of the same kind and
mark, which belong to different owners, shall distinguish them by
countermarks, and designate the merchandise respectively belonging to
each principal. (n)
Art. 1905.The commission agent cannot, withoutthe express or impliedconsent of the principal,sell on credit. Should he do so, the principal may
QuickTime and a
demand from himTIFF(Uncompressed)
paymentdecompressor
incash, but theare needed to see this picture.
commission agent shall be entitled to any interest or benefit, which may
result from such sale. (n)
Art. 1906. Should the commission agent, with authority of the principal,
sell on credit, he shall so inform the principal, with a statement of the
names of the buyers. Should he fail to do so, the sale shall be deemed to
have been made for cash
Commission Agent: One whosebusiness is toreceive and sell goodsfor a commission and who isentrusted by the principal with thepossession of goods to be sold, andusually selling in his own name.
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Distinction between Ordinary Agent &
CommissionAgent
Ordinary Agent Commission AgentActs for and in behalf
of May act in his own namehis principal or in that of the principalNeed not have Must be in possession ofpossession of the the thing he disposesprincipals goods
Distinctions between Commission Agent & Broker
Commission Agent Broker Engaged in the purchase No custody or and sale for a principal of possession of the thing
personal property which hedisposes;
merely a
has to be placed in his go-between, anpossession and disposal intermediary between the
seller and thebuyer
Has a relation with Maintains no relation withprincipal, buyer orseller,
the thing
which he
and property which is the purchases or sellsobject of the transaction
Obligations of a Commission Agent:
1. Responsible for the goods received by him, asdescribed in the consignment, UNLESSuponreceiving them he should make a writtenstatement of the damage and deteriorationsuffered by the same
2. If goods are of the same kind and mark butbelonging to different owners, make adistinction by counter marks and designatethe merchandise respectively belonging toeach principal cannot, without consent of theprincipal, sell on credit; should he do, principalmay demand payment in cash, but thecommission agent entitled to anyinterest/benefit which may result from such
sale3. If an agent receiving guarantee commission (a
del credere agent), bears the risk of collectionand pay the principal the proceeds of the sale
on the same terms agreed upon with theQuickTime and a
purchaser liableTIFF(Uncompressed)
fordamagesdecompressor
if agent does notare needed to see this picture.
collect the credits of his principal at the time whenthey become due and demandable, UNLESS heproves, that he exercised due diligence for thatpurpose.
CHAPTER 3: OBLIGATIONS OF THE PRINCIPAL
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Art. 1910. The principal must comply with all theobligations which the agent may have contractedwithin the scope of his authority.
As for any obligation wherein the agent hasexceeded his power, the principal is not bound except
when he ratifies it expressly or tacitly. (1727)
Art. 1912. The principal must advance to the agent,should the latter so request, the sums necessary forthe execution of the agency.
Should the agent have advanced them, the principal must reimburse him therefor, even if thebusiness or undertaking was not successful, providedthe agent is free from all fault.
The reimbursement shall include interest on the
sums advanced, from the day on which the advance
was made. (1728)
Art. 1913 .The principal must also indemnify theagentfor all the damages which the execution of the agency
may have caused the latter, without fault or negligence
on his part. (1729)
Art. 1915. If two or more persons have appointed an
agent for a common transaction or undertaking, they
shall be solidarily liable to the agent for all the
consequences of the agency. (1731)
Art. 1916. When two persons contract with regard tothe same thing, one of them with the agent and theother with the principal, and the two contracts are
incompatible with each other, that of prior date shall bepreferred, without prejudice to the provisions of Article1544. (n)
Art. 1917. In the case referred to in the precedingarticle, if the agent has acted in good faith, the
principal shall be liable in damages to the third personwhose contract must be rejected. If the agent acted inbad faith, he alone shall be responsible. (n)
Obligations of the Principal to the Agent:
1. Comply with all the obligations agent contracted in
representation of the principal2. Advance sums necessary for the execution of theagency, when agent so requests; liable forreimbursement regardless of the undertakingssuccess whenever agent had advanced & has nofault; includes interest
3. Reimburse the agent for all advances made
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by him provided the agent is free from fault 4.Indemnify the agent for all the damages
which the execution of the agency may havecaused the latter without fault or negligence onhis part
5. Pay the agent the compensation agreed upon orthe reasonable value of the latters services
Liability of 3rd persons to the Principal:
1. In Contract a 3rd person is liable to the principal
upon contracts entered into by his agent, as if thecontract has been entered into by the principal.
2. In Tort the 3rdpersons tort liability to theprincipal,insofar as the agent is involved in the tort, arises in 3situations:
a. Where the 3rd person damages or injuresproperty or interest of the principal in thepossession of the agent
2. Where the 3rd person colludes with theagent to injure/defraud the principal
3. Where the 3rd person induces the agentto violate his contract with the principal tobetray the trust reposed upon him by theprincipal.
Requisites for solidary liability of principals:1. There are 2 or more principals2. The principals have all concurred in the
appointment of the same agent3. The agent is appointed for a common transaction
or undertaking
Note: The rule in Art. 1915 applies even when theappointments were made by the principals in separateacts, provided that they are for the same transaction. Thesolidarity arises from the common interest of theprincipals and not from the act of constituting the agency.
Rule where 2 persons contract separately with agentand principal
Two persons may contract separately with theagent and the principal with regard to the samething. If the two contractsQuickTimeareandincompatible with
TIFF (Uncompressed) decompressor
each other, the oneareofneededpriortoseedatethispictureshall. be
preferred. This is subject, however, to the rules under Article
1544 of the Civil Code (Double Sale). 1
1Art. 1544. If the same thing should have been sold todifferentvendees, the ownership shall be transferred to the person whomay have first taken possession thereof in good faith, if it shouldbe a movable property.
Art. 1914.The agent may retain in pledge the things
which are the object of the agency until the principal
effects the reimbursement and pays the indemnity
set forth in the two preceding articles. (1730)
Agents Right of Retention:
1. Specific (only for those goods connected with the
agency) and2. Until the principal effects the reimbursement and
pays the indemnity
Art. 1918 .The principal is not liable for theexpensesincurred by the agent in the following cases:1. If the agent acted in contravention of the principal's instructions, unless the lattershould wish to avail himself of the benefitsderived from the contract;
2. When the expenses were due to the fault ofthe agent;
3. When the agent incurred them withknowledge that an unfavorable result wouldensue, if the principal was not aware thereof;
4. When it was stipulated that the expenses
would be borne by the agent, or that the latter
would be allowed only a certain sum. (n)
Principals Liability for Expenses:
General Rule: Principal is liable for the expensesincurred by the agent
Exceptions: (AFUS)1. If the agent acted in contravention of the
principal's instructions, unless principalderives benefits from the contract
2. When the expenses were due to the fault ofthe agent
3. When the agent incurred them with
knowledge that an unfavorable result wouldensue, if the principal was not aware thereof
Should it be immovable property, the ownership shallbelong to the person acquiring it who in good faith first recordedit in the Registry of Property.
Should there be no inscription, the ownership shallpertain to the person who in good faith was first in thepossession; and, in the absence thereof, to the person whopresents the oldest title, provided there is good faith.
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4. When it was stipulated that the expenses
would be borne by the agent, or that the
latter would be allowed only a certain sum
Art. 1911. Even when the agent has exceeded hisauthority, the principal is solidarily liable with the
agent if the former allowed the latter to act as
though he had full powers. (n)
Who can be estopped to deny agency?1. Estoppel of Agent- one professing to act asagent estopped to deny his agency both asagainst his asserted principal and the thirdpersons interested in the transaction in which heis engaged2. Estoppel by the Principal
1. As to agent one knowinganother is acting as his agentand fails to repudiate his acts,or accept the benefits of them,will be estopped to deny the
agency as against such other2. As to sub-agent for the
principal to be estopped fromdenying his liability to a thirdperson, he must have known orbe charged with knowledge ofthe transaction and the terms ofthe agreement between theagent and sub-agent
3. As to third persons one whoknows thatanother is acting ashis agent or permitted anotherto appear as his agent, to theinjury of third persons who have
dealt with the apparent agent assuch in good faith and in theexercise of reasonableprudence, is estopped to denythe agency
3. Estoppel of Third Persons a third person,having dealt with one as an agent may beestopped to deny the agency as against the
principal, agent or 3rd persons in interest4. Estoppel of the Government - government
neither estopped by the mistake/error of itsagents; may be estopped
QuickTimethrough
andaaffirmative acts
TIFF (Uncompressed) decompressorare needed to seethis pict ure.
of its officers acting within the scope of their
authority
Distinction between Ratification and Estoppel
Ratification EstoppelRests on intention Rests on prejudice
Affects the entire Affects only relevanttransaction from the parts of the transaction
beginning
Substance of ratification Substance of estoppel isis confirmation of an the principalsauthorized acts or inducement to another toconduct after it has been act to his prejudice
done
Distinction between Apparent Authority & Authority
by Estoppel
Apparent Authority Authority by EstoppelThough not actually Where the principal, bygranted, principal his negligence, permitsknowingly permits/holds his agent to exerciseout the agent as powers not granted topossessing the him, even though thenecessary powers to act principal may have noin a certain way notice or knowledge of
the conduct of the agent
CHAPTER 4: MODES OF EXTINGUISHING
AGENCY
Agency is Extinguished: (EDWARD)1. By the expiration of the period forwhich the agency wasconstituted.2. By the death, civil interdiction,
insanity or insolvency of theprincipal or of the agent;
3. By the withdrawal of the agent;4. By the accomplishment of
the object or purpose of theagency;
5. By its revocation ;6. By the dissolution of the firm or
corporation which entrusted or
accepted the agency(Art.
1919)
0 The list not exclusive; causesparticularonly toagency; may be extinguished by the modes ofextinguishment of obligations in generalwhenever they are applicable, like loss of thething and novation
0 Agency is TERMINATED, as a matter of law,
upon the outbreak of war.
Presumption of Continuance of Agency
0 It means that when once shown to have existed,an agency relation will be presumed to havecontinued, in the absence of anything to showits termination.
Continuance of AgencyParties must be
1. Present,2. Capacitated and3. Solvent
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Modes of extinguishing an agency, generally:1. Agreement2. Subsequent acts of the parties which may be
either:1. By the act of both parties or by mutual
consent2. By the unilateral act of one of them3. By operation of law
Note: Even if the reason for extinguishing the agency is
not true, the agent cannot insist on reinstatement. The
agent can only demand damages.
What happens of the subject matter of the agency islost or destroyed?
In the absence of any agreement by the partiesto the contrary, the loss or destruction of the subjectmatter of the agency terminates the agents authority todeal with reference to itExceptions:that which was destroyed without substantialdetriment to either party
2. if the destroyed subject matter was not infact essential to the contract
3. a partial loss or destruction
Form of renunciation:
It is not always necessary for the agent torenounce the agency expressly. He can do soimpliedly, such as:
1. where he has conducted himself in a manner
incompatible with his duties as agent
2. when he abandons the object of his agency
and acts for himself in committing a fraud uponhis principals
3. when he files a complaint against the principal
and adopts an antagonistic attitude towards him
Art. 1930.The agency shall remain in full forceand
effect even after the death of the principal, ifit has been constituted
QuickTimeinthe
andcommon
ainterest of
TIFF (Uncompressed) decompressor
the latter and of theareneededagent,tosee thisorpicturein.theinterest of a third person who has accepted thestipulation in his favor. (n)
Art. 1931. Anything done by the agent, withoutknowledge of the death of the principal or of any
other cause which extinguishes the agency, is valid
and shall be fully effective with respect to third
persons who may have contracted with him
in good faith. (1738)
Exceptions to Extinguishment by Death
1. If the agency is coupled with an interest
2. If the act of the agent was executed without theknowledge of the death of the principal and thethird person who contracted with the agent actedin good faith
3. To avoid damage4. If it has been constituted in the common interest
of the principal and of the agent, or in the interest
of a third person who has accepted the
stipulation in his favor
Art. 1932. If the agent dies, his heirs must notifythe
principal thereof, and in the meantime adopt such
measures as the circumstances may demand in theinterest of the latter. (1739)
Can the heirs continue the agency?
General Rule: agency calls for personal services on thepart of the agent; rights & obligations are nottransmissible
Exceptions:a. Agency by operation of law, or a presumed
or tacit agency2. Agency is coupled with an interest in the
subject matter of the agency (ex.power
of sale in a mortgage).
Exceptions to Extinguishment Upon Loss orDestruction of Subject Matter
1) If it is possible to substitute other material for thatwhich was destroyed without substantialdetriment to either party or if the destroyedsubject matter was not in fact essential to thecontract;
2) A partial loss or destruction does not alwaysresult in a complete termination of the agency,and under such circumstances, while the agencymay be ended in so far as the destroyed propertyis concerned, it may continue in existence as to
other property not affected1) If the loss brought about by the
principal (ex.. principal sellssubject matter to another partyeven if an agent has beenconstituted in reference to it),principal liable for damages forhis wrongful terminating act; ifsubject matter is lost withoutprincipals fault, no liabilityassumed by him
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Change of Circumstance:
General Rule: when there is a basic change in thecircumstances surrounding the transaction, which as notcontemplated by the parties and which would reasonablylead the agent to believe that the principal would not
desire him to act, the authority of the agent is terminatedExceptions:1. If the original circumstances are restored
within a reasonable period of time, theagent's authority may be revived
2. Where the agent has reasonable doubts asto whether the principal would desire him toact, his authority will not be terminated if heacts reasonably
3. Where the principal and agent are in closedaily contact, the agent's authority to act willnot terminate upon a change of circumstances if the agent knows theprincipal is aware of the change and does notgive him new instructions
Art. 1920. The principal may revoke the agency at
will, and compel the agent to return the document
evidencing the agency. Such revocation may be
express or implied. (1733a)
Art. 1921. If the agency has been entrusted for the
purpose of contracting with specified persons, its
revocation shall not prejudice the latter if they were
not given notice thereof. (1734)
Art. 1922.If the agent had general powers,revocationof the agency does not prejudice third persons whoacted in good faith and without knowledge of therevocation. Notice of the revocation in a newspaperof general circulation is a sufficient warning to third
persons. (n)
Art. 1923. The appointment of a new agent for thesame business or transaction revokes the previousagency from the day on which notice thereof wasgiven to the former agent, without prejudice to the
provisions of the two precedingarticles. (1735a) QuickTime and a
TIFF (Uncompressed) decompressor areneeded to see this picture.
Art. 1924. The agency is revoked if the principal
directly manages the business entrusted to the
agent, dealing directly with third persons. (n)
Art. 1925.When two or more principals havegranted
a power of attorney for a common transaction, any
one of them may revoke the same without the
consent of the others. (n)
Art. 1926.A general power of attorney is revokedbya special one granted to another agent, as regardsthe special matter involved in the latter.(n)
Art. 1927.An agency cannot be revoked if abilateralcontract depends upon it, or if it is the means offulfilling an obligation already contracted, or if a
partner is appointed manager of a partnership in thecontract of partnership and his removal from themanagement is unjustifiable. (n)
Art. 1928.The agent may withdraw from theagencyby giving due notice to the principal. If the lattershould suffer any damage by reason of thewithdrawal, the agent must indemnify him therefor,unless the agent should base his withdrawal uponthe impossibility of continuing the performance ofthe agency without grave detriment to himself.(1736a)
Art. 1929.The agent, even if he should withdrawfromthe agency for a valid reason, must continue to act
until the principal has had reasonable opportunity to
take the necessary steps to meet the situation.
(1737a)
Revocation: Termination of the agency by the
subsequent act of the principal
Renunciation/Withdrawal:Termination of theagency by
the subsequent act of the agent
May the agency be extinguished at will?
1. AGENT may do so but subject to the contractualobligations owing the principal (i.e. fixed period oftime for the agency or purpose not yetaccomplished);
1. Expressly or impliedly1. conducted himself in a
manner incompatiblewith his duties;
2. abandons the object ofagency and acts forhimself in committing afraud upon his principal;
3. he files a complaintagainst the principal andadopts an antagonisticattitude towards him
with just cause - give due noticewithout just cause - liable for
damages if agent suffers damages
thereby UNLESS the
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agent should base his withdrawalupon the impossibility of continuingthe performance of the agencywithout grave detriment to himself
2. The mere fact that the agent violates his
instructions does not amount to renunciation, andalthough he may thus render himself liable to theprincipal, he does not cease to become an agent.
2. PRINCIPAL may also revoke the agency at
will Exception: agency coupled with interest
1. When a bilateral contract depends uponthe agency
2. When the agency is the means of fulfilling an obligation already contracted
3. When a partner is appointed as managerof a partnership in the contract ofpartnership and hisremoval from the management is
unjustifiable.Exception to the exception:when theagent
acts to defraud the principal
Implied Revocation of Agency
1. Principal appoints a new agent for the same businessor transaction, only if there is incompatibility);effective as between the principal and the agent onlyif communicated to the agent; does not prejudicerights of third persons acting in good faith withoutknowledge of the revocation
2. Principal directly manages the business entrusted to
the agent, dealing directly with 3rd persons
Effect of Issuance of a Special Power of Attorney:
The general power is impliedly revoked as to matterscovered by the special power because a specialpower naturally prevails over a general power.
Principals Liability for Damages despite Revocation:QuickTime and a
1. If the agency was consti tuted for a fixedTIFF (Uncompressed) decompressor
are needed to see this picture.period, the principal shall be liable for
damages occasioned by the wrongfuldischarge of the agent before the expirationof the period fixed
2. Even if there was no time fixed for thecontinuance of the agency, but the agentcanprove that the principal acted in bad faith byrevoking the agency in order to avoidthepayment of commission about to beearned,
the principal can be held liable for damages
Necessity of Notice of Revocation
1. As to the agent - express notice always necessary;sufficient notice if the party to be notified actuallyknows, or has reason to know, a fact indicating thathis authority has been terminated/suspended;revocation without notice to the agent will not renderinvalid an act done in pursuance of the authority
2. As to 3rd persons express notice necessary
3. As to former customers - actual notice must begiven to them because they always assume thecontinuance of the agency relationship
4. As to other persons - notice by publication is
enough
Effect of Extinguishment Without Notice
0 Act of agent deemed valid insofar as 3rd parties
acting in good faith and without knowledge ofrevocation
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