TANGENTE, Hope Angelie R.

BSA IV

Written Report on Agency

Agency is a relationship which implies power in an agent to contract with a third person
on behalf of a principal. It is this power to affect the principals contractual relations with third
persons that differentiates the agent from the employee, servant, and independent contractor.

Agency, in nature, is a contract having the following requisites: consent of the

contracting parties, object, and cause. It is also a representative relation, which constitutes the
basis of agency. The agent renders some service or does something in representation or on
behalf of another. The purpose of agency is to extend the personality of the principal. It enables
the activity of man which is naturally limited in its exercise by his physiological conditions to be
extended permitting him to perform diverse juridical acts through another, when his physical
presence is impossible or inadvisable, at the same time in different places.

A 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.

The essential elements of agency are:

a.) There is consent, express or implied, of the parties to establish the relationship
b.) The object is the execution of a juridical act in relation to third persons
c.) The agent acts as a representative and not for himself
d.) The agent acts within the scope of his authority

The characteristics of agency are:

a.) Consensual because it is perfected by mere consent
b.) Principal because it can stand by itself without the need of another contract
c.) Nominate because it has its own name
d.) Unilateral because it creates obligations for only one of the parties
e.) Bilateral because it gives rise to reciprocal rights and obligations
f.) Preparatory because it is entered into as a means to an end. Like the creation of
other contracts

The difference between agency and other similar contracts:

AGENCY
Agent may be given funds by the principal to
advance the latters business
AGENCY
The basis is representation
AGENCY
Subject to the control and direction of the
principal whom he represents
AGENCY
Acts only for his principal
AGENCY
Representation is expressly conferred
AGENCY
A commission agent is one engaged in the
purchase or sale for another of personal
property which, for this purpose is placed in
his possession and at his disposal
AGENCY

LOAN
Borrower is given money for purpose of his
own and he must generally return it whether
or not his own business is successful.
LEASE OF SERVICE
The basis is employment
INDEPENDENT CONTRACT
The independent contractor exercises his
employment independently
PARTNERSHIP
Acts not only for his co-partners and the
partnership but also as principal of himself
NEGOTIORIUM GESTIO
Representation is without authority and
knowledge of the owner of the business
BROKERAGE
A broker has no relation with the thing he
buys and sells. He is merely an intermediary
between the purchaser and the vendor
SALE

The agent receives the goods as the goods

of the principal who retains ownership over
them.

The buyer receives the goods as owner.

The agent simply has to account for the

proceeds of the sale he may make on the
principals behalf.

The buyer has to pay the price.

The agent can return the object in case he is

unable to sell the same to a third person.

The buyer cannot return the object sold.

The agent makes no warranty for which he

assumes personal liability as long as he acts
within his authority and in the name of the
seller.

The seller warrants the thing sold.

The agent, in dealing with the thing received,

must act and is bound according to the

The buyer can deal with the thing sold as he

pleases, being the owner

instructions of his principal.

The kinds of agency are:

1. As to manner of its creation:
a.) Express where the agent has been actually authorized by the principal
b.) Implied one which is implied from the acts of the principal from his silence or lack
of action or failure to repudiate the agency, knowing that another person is acting on
his behalf without authority
2. As to its character:
a.) Gratuitous where agent receives no compensation for his services
b.) Compensated where agent receives compensation for his services
3. As to extent of business covered:
a.) General one which comprises all the business of the principal
b.) Special one which comprises one or more specific transactions
4. As to authority conferred:
a.)
Couched in general terms one which is created in general terms and is deemed to
comprise only acts of administration
b.) Couched in specific terms one authorizing only the performance of a specific act
5. As to its nature and effects:
a.) Ostensible one where the agent acts in the name and representation of the
principal
b.) Simple one where the agent acts for the account of the principal but in his own
name

There are also cases where a special power of attorney is necessary for the agent to be
able to execute general acts of dominion or ownership. Special power of attorney is necessary
in the following cases:
a.) To make such payment as are not usually considered as acts of administration
b.) To effect novations which put an end to obligations already in existence at the time
the agency was constituted

c.) To compromise, to submit questions for arbitration, to renounce the right to appeal
from a judgement, to waive objections to the venue of an action, or to abandon a
prescription already acquired
d.) To waive an obligation gratuitously
e.) To enter into any contract by which the ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable consideration
f.) To make gifts, except customary ones for charity or those made to employees in the
business managed by the agent
g.) To loan or borrow money, unless the latter act be urgent and indispensable for the
preservation of the things which are under administration
h.) To lease any real property to another person for more than one year
i.) To bind the principal to render some service without compensation
j.) To bind the principal in a contract of partnership
k.) To obligate the principal as a guarantor or surety
l.) To create or convey real rights over immovable property
m.) To accept or repudiate an inheritance
n.) To ratify or recognize obligations contracted before the agency
o.) Any other act of strict dominion

The parties to the contract are the principal and the agent. The principal is the person
represented. He is the one whom the agent represents and from whom he derives his authority.
The agent is the person acting in a representative way. He is the one who acts for and
represents another. The acts that may be delegated to agents in general is that what a man may
do I person, he may do thru another except personal acts and criminal acts or acts not allowed
by law. Personal acts include the right to vote during election, the making of a will, and
statements which are required to be made under oath. The authority of an agent is the power of
the agent to affect legal relations of the principal by acts done in accordance with the principals
manifestation of consent to him.
The authority of the agent may be:
a.)

Actual when it is actually granted and it may be express or implied

b.) Express When it is conferred by words
c.) Implied when it is incidental to the transaction or reasonably necessary to
accomplish the purpose of the agency
d.) Apparent or Ostensible when it is conferred by conduct or even by silence
e.) General when it refers to all the business of the principal

f.) Special when it is limited only to one or more specific transactions

g.) Authority by necessity when it is demanded by virtue of the existence of an
emergency

Agents may be classified according to the nature and extent of his authority:
a.) Universal agent one authorized to do all acts that the principal may personally do
and which he can lawfully delegate to another the power of doing
b.) General Agent one authorized 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
c.) Special or Particular Agent one authorized to act in one or more specific
transactions or to act upon a particular occasion

The obligations of the agent to the principal are:

a.) To carry out the agency in accordance with its terms
b.) To answer for damages which through his non-performance the principal may suffer
c.) To finish the business already begun on the death of the principal, should delay detail
any danger
d.) To observe the diligence of a good father of a family in the custody and preservation
of the goods forwarded to him by the owner in case he declines an agency, until an
agent is appointed
e.) To advance the necessary funds should there be a stipulation to that effect
f.) To act in accordance with the instructions of the principal
g.) Not to carry out the agency if its execution would manifestly result in loss or damage
to the principal
h.) To answer for damages should he prefer in case of conflict, his own interests to
those of the principal
i.) Not to loan to himself without the consent of the principal when he has been
authorized to lend at interest
j.) To render an account of his transactions and to deliver to the principal whatever he
may have received by virtue of the agency
k.) To distinguish by countermarks and designate the merchandise respectively
belonging to the principal, in the case of a commission agent who handles goods of
the same kind and mark which belong to different owners

l.) To be responsible in certain cases for the acts of the substitute appointed by him
m.) To pay interest on funds he has applied to his own use
n.) To inform the principal, where an authorized sale of credit has been made of such
sale
o.) To bear risk of collection, should he receive also on sale, a guarantee commission
p.) To indemnify the principal for damages for his failure to collect the credits of his
principal at the time that they become due
q.) To answer for his fraud or negligence

The kinds of principal are:

a.) Disclosed principal this is the usual type of agency wherein at the time of the
transaction contracted by the agent, the other party thereto has notice that the agent
is acting for a principal and of the principals identity
b.) Partially disclosed principal if the other party has notice that the agent is or may be
acting for a principal but has no notice of the principals identity
c.) Undisclosed principal if the other party has no notice that the agent is acting for a
principal

The obligations of the principal are:

a.) To comply with all the obligations which the agent may have contracted within the
scope of his authority and in the name of the principal
b.) To advance to the agent, should the latter so request, the sums necessary for the
execution of the agency
c.) To reimburse the agent for all the advances made by him provided the agent is free
from fault
d.) To indemnify the agent for all the damages which the execution of the agency may
have caused the latter without fault or negligence on his part
e.) To pay the agent the compensation agreed upon, or if no compensation, the
reasonable value of the agents services
The modes of extinguishing an agency are:
1.) By Subsequent acts of the parties:
a.)

By its revocation
Kinds of revocation:

 When the principal appoints a new agent for the same business or
transaction
When the principal directly manages the business entrusted to the agent
b.) By the withdrawal of the agent

2.) By operation of law:

a.)

By the death, civil interdiction, insanity, or insolvency of the principal or of the agent
When death of principal does not terminate agency:
If the agency has been constituted in the common interest of the principal
and the agent
If it has been constituted in the interest of a third person who accepted the
stipulation in his favor.

b.)

By the dissolution of the firm or corporation which entrusted or accepted the agency
3.) By agreement

a.)

By the accomplishment of the object or purpose of the agency

b.)

By the expiration of the period of which the agency was constituted