Agency is the relation which results from the manifestation

of consent by one person to another that the other shall act

on his behalf and subject to his control, and consented by
the other so to act.

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Characteristics of an agency:
Principal
Nominate
Bilateral
Preparatory
Commutative
Generally onerous
Representative relation
Fiduciary relation

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Capacity of the principal:

Must be capacitated to give consent
May be natural or juridical person
Generally, an emancipated minor and a married woman
can be a principal

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Capacity of the agent:

Must be able to bind himself, nut only insofar as his
obligations to his principal are concerned.

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Kinds of agency according to form:

Oral generally, this is sufficient
Written when the law requires a specific form
Example: Authority given to an agent for the sale of a
piece of land or any interest therein must be in writing,
otherwise the sale is void.

Between persons who are present, acceptance is implied

when the principal delivers his power of attorney and the
agent receives it without objection.

Between persons who are absent, acceptance cannot be

implied by the silence of the agent, except:
Principal transmits power of attorney and agent receives it
without objection
Principal entrusts to him by letter or telegram a power of
attorney with respect to the business which he is habitually
engaged as an agent, and he did not reply to the letter

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Notice of agency to third persons:

Special information
Public advertisement

The power shall continue to be in full force until the notice is

rescinded in the same manner it is given.

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Examples of acts of administration:

To sue for the collection of debts
To employ workers or servants and employees needed for
the conduct of business
To engage counsel to preserve the ownership and
possession of the principals property
To lease real property to another person for one year or
less, provided the lease is not registered
To make customary gifts for charity or to employees in the
business managed by the agent
To borrow money if it be urgent and indispensable for the
preservation of the things under administration

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Power to sell carries with it power to:

Find purchaser or to sell directly
Deliver the property
Make the usual representation and warranty
Execute the necessary transfer documents
Fix the terms of the sale
Sell only for cash
Receive the price, unless he was authorized only to solicit
orders

Power to sell excludes power to mortgage.

Power to compromise does not authorize submission to

arbitration.

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Two important principles of a true agency:

Agent must act within the scope of his authority
Agent must act in behalf of his principal

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If agent is with authority:

In principals behalf valid
Agents behalf principal has no right of action against the
persons with whom the agent has contracted and vice
versa, thus agent is directly bound in favour of the person
whom he has contracted as if the transaction were his own,
except when the contract involves things belonging to the
principal, in which case sale is valid and principal can sue
and be sued.

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If agent is without authority:

In principals behalf unauthorized and unenforceable, but
can be ratified (validated from the very beginning)
Agents behalf valid, provided at the time of delivery he
can legally transfer the ownership of the property

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Special power of attorney is required to:

Make such payments as are not usually considered as acts
of administration
Effect novations which put an end to obligations already in
existence at the time the agency was constituted

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
Waive any obligation gratuitously
Enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or
for a valuable consideration
Generally the sale or purchase of personal
property should also be covered by SPA
Make gifts, except customary ones for charity or those
made to employees in the business managed by the agent
Loan or borrow money, unless borrowing is urgent and
indispensable for the preservation of the things which are
under administration
Lease any real property to another person for more than
one year
Bind the principal to render some service without
compensation
Bind the principal in a contract of partnership
Obligate the principal as a guarantor or surety
Create or convey real rights over immovable property
Accept or repudiate an inheritance
Ratify or recognize obligations contracted before the
agency
Any other act of strict dominion

Authority to collect does not carry with it authority to receive

partial payment, nor the authority to accept commercial
paper as payment. However, if the agent is able to collect

the monetary equivalent, the payment should be

considered good.

Doctrine of agency by necessity by virtue of the existence

of an emergency, the authority of an agent is corresponding
enlarged in order to cope with the exigencies or the
necessities of the moment
Agents authority is not considered exceeded should it have
been performed in a manner more advantageous to the
principal.

The agent may finish the business already begun on the

death of the principal, should delay entail any danger.

Agent who has been authorized to sell is not allowed to

bind the principal by selling to himself.

Should there be a stipulation that the agent shall advance

necessary funds, he is bound to do so unless the principal
is insolvent (with judicial decree of insolvency).

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.

If agent has been empowered to borrow money, he may be

the lender at the current rate of interest

If agent has been authorized to lend money at interest, he

cannot borrow it without the consent of the principal.

Every agent is bound to render an account of his

transactions and to deliver to the principal whatever he may
have received by virtue of the agency, even though it may
not be owing to the principal. Stipulation exempting the
agent from this obligation shall be void.

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An agent is responsible for the acts of the substitute if:

He was not given the power to appoint one
He was given the power but without designating the person
and the person is notoriously incompetent or insolvent

Acts of the substitute against the prohibition of the principal

is void.

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Guarantee commission if received by agent, risk of

collection shall be borne by him as he shall pay the
principal the proceeds of the sale as agreed upon.
Insolvency of the debtor is not a defence.

If agent has exceeded his authority, principal is solidarily

liable if he allowed the latter to act as though he had full
powers. (Agency by Estoppel)

Agent may retain in pledge the things which are the subject
of the agency (though he cannot sell the same) until the
principal reimburses him for funds advanced and indemnity
to damage caused by him by the agency.

If two or more persons have appointed an agent for a

common transaction or undertaking, they shall be solidarily
liable for all consequences of the agency. Any one of them
may revoke the same without the consent of the others.

When both principal and agent contract with respect to the

same thing:
1. Earlier contract shall be preferred unless:
a. Movable first possessor
b. Immovable first registrant
Principal shall be liable for damages to person whose
contract was rejected if the agent was in good faith.

Principal is not liable for expenses incurred by the agent if:

1. Agent acted in contravention to the principals
instructions
2. Expenses were due to the fault of the agent
3. Expenses were incurred with knowledge that an
unfavourable result would ensue
4. When it was stipulated that expenses would be borne
by the agent, or a certain sum has been laid down

Modes of extinguishment of an agency: (EDWARD)

1. Expiration of the period of agency
2. Death, civil interdiction, insanity (must be certified) or
insolvency of the principal or agent
3. Withdrawal of the agent
4. Accomplishment of the object or purpose of the
agency
5. Revocation
6. Dissolution of the firm or corporation which entrusted
or accepted the agency
Contract entered into by an agent, without knowledge of the
death of the principal or any cause of extinguishment of
agency, contracts with a third person who contracted with
him in good faith is valid. (Except for personal obligations)

If there are two or more agents, even if they have been

appointed simultaneously, liability is only joint if solidarity is
not stipulated. If solidarity has been stipulated, one cannot
be held accountable for the act of fellow agent who acted
beyond their authority.

If the agent contracts in the name of the principal exceeds

his authority and the third party is aware of the limits of the
powers granted to the agent, the contract is void (even as
between agent and third party). However, if agent
promised to obtain the ratification of the principal, he shall
be liable.
As far as third persons are concerned, an act is deemed to
have been performed within the scope of the agents
authority if the act is within the terms of the power of
attorney (written).
Commission agent one in which the commission agent
must be a merchant or broker, the agent having the option
of acting in his own name or in that of the principal.

Commission agent cannot sell on credit. If he does so,

principal has 2 choices:
Require cash payment principal cannot enrich himself at
the agents expense (no interest or benefit from such sale)
Ratify the sale on credit principal will assume all risk

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Principal may revoke the agency at will except:

When it is coupled with an interest of an agent in the
subject matter of the power
When a bilateral contract depends upon the agency
When the agency is the means of fulfilling an obligation
already contracted
In case of a partner appointed manager in the contract of
partnership and his removal from the management is
unjustifiable
When there has been a waiver by the principal
When the principal is obliged not to revoke

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When revocation is done in bad faith

If agent had general powers, notice of revocation in a

newspaper of general circulation is a sufficient warning to
third persons.

Effect of appointment of new agent:

1. Appointment of new agent revokes the first agency in
case of incompatibility
2. Special power revokes general power
3. If first agent is not notified of the appointment of a
second agent, it is understood that the first agency still
exists.

Agent ma withdraw from the agency any time by giving due

notice to the principal. He shall indemnify the principal for
damages suffered caused by the withdrawal unless the
basis of the withdrawal is the impossibility of the
performance of the agency without grave detriment to
himself.