ACCTG 606 - LAW ON AGENCY
MULITPLE CHOICE - Encircle the letter corresponding
to the correct answer.
1. Principal appoints B as his agent to sell his land.
Which is correct?
a. A’s authority is oral and B sells the land in
writing.
b. A’s authority is written and B sells the land in
a public instrument.
c. A’s authority is written and B sells the land
orally.
d. A’s authority is oral and B sells the land orally.
2. Agent B becomes directly liable to Principal A if
a. B appoints a substitute or sub-agent without
authority.
b. If the substitute acts negligently although
authorized.
c. If authorized, A gets a substitute who is
notoriously incompetent or insolvent.
d. All of the above.
e. None of the above.
3. Ely appointed Glory as her agent to sell Ely’s car
for P200,000. Glory sold Ely’s car to Pacita for
P200,000 in Glory’s name. After delivery, Pacita
found hidden defects in Ely’s car. Whom can Pacita
sue - Ely or Glory?
a. Under the principle of “caveat emptor”, Pacita
bears the loss or defects.
b. Pacita can sue Glory because Glory acted in
her own name in the sale.
c. Pacita can sue Ely because the car belongs to
Ely.
d. Neither Ely nor Glory can Pacita sue because
the sale is already perfected.
4. The 3rd party appointed either by the Principal or
the Agent to assist out in carrying the agency is
known as:
a. The Co- Principal
b. Co- Agent
c. Sub- Agent or Substitute
d. Assistant’s Agent
5. The Agent’s authority couched in general terms
means the Agent can only perform:
a. Acts of administration
b. Acts of dominion or ownership
c. Both acts of administration and Dominion
d. None of the above
6. Principal P authorized agent A to sell his land for
P100,000 cash and A was entitled into a 10%
commission. A sold the land for P150,000 cash.
How much must A remit to P?
a. P90,000
b. P150,000
c. P140,000
d. P100,000
7. Principal P authorized agent A to lend out his own
money with 10% Int. p.a.
a. A can borrow P’s money for his own use
without P’s consent.
b. A can borrow P’s money with P’s consent.
c. A is not allowed to borrow P’s money for his
own use.
d. None of the above.
8. One of the following is not a mode of
extinguishment of Agency. Which is it?
a. Revocation by Principal
b. Withdrawal by Agent
c. Accomplishment of the Agency
d. When Agency is coupled with Principal’s or
Agent’s, or both interest.
9. P appointed B as his new agent to sell his land,
without first notifying his first agent A that he is
being replaced.
a. B alone gets the commission if he sell’s P’s
land.
b. B’s appointment as new agent without P
notifying A is void.
c. A is still considered as agent of P and therefore
entitled to a commission even if it is B who sells
the land.
d. Both A and B are not recognized as P’s valid
agent.
10. Two principals appointing one agent for the same
act of agency will be
a. Jointly liable
b. Solidary liable
c. Individually liable
d. None of the above
11. Commission granted by principal to commission
agent to assume risk of collection.
a. Extraordinary commission
b. Collection commission
c. Del Credere commission
d. Extra commission
12. Agents A and B were appointed simultaneously and
both agreed to bound solidarily. If both failed to
carry out the Agency, whom can the principal hold
liable?
a. Both A and B will be liable individually.
b. Principal can sue either A or B for non-
fulfillment of the agency.
c. Only A if he acted beyond the scope of his
authority.
d. None of the above.
13. If principal fails to reimburse the agent for the
latter’s advances and indemnify the agent for his
damages,
a. The agent may sue the principal for recovery of
his expenses and damages.
b. The agency may keep the object of the agency
as a legal pledge.
c. The agent may appropriate for his own the
object of the agency.
d. None of the above.
14. Agent A sold P’s car to X for only P80,000 against
P’s instructions to sell the car for P100,000.
However, A turned over to P the P80,000 paid by X
and P accepted the money.
a. The sale by A to X is deemed valid and binding
on P because P is deemed to have ratified by
accepting the P80,000.
b. The sale between A and X is not binding on P
because A acted beyond his authority.
c. X can enforce his contract of sale of P’s car to
A only.
d. P can deject the sale between A and X as A
acted beyond his authority.
15. Paterno telephoned Angel and authorized him to
sell Paterno’s land for P100,000 cash. Angel was
able to sell Paterno’s land to Xavier for P100,000
cash.
a. Xavier cannot hold Paterno liable if the latter
refuses to sell his land.
b. Angel will be liable to Xavier if Paterno refuses
to sell his land.
c. The contract of sale between Angel and Xavier
is not valid because it was oral.
d. The authority of Paterno to Angel must be in
writing because it involves real property.
e. Both a and b
f. Both c and d
16. B wrote S, his sister, to sell parcel of his land. The
land was purchased by X, but S did not forward
the money to B. B now wants to recover the parcel
of land.
a. B cannot recover because the sale is valid.
b. B can recover because the sale between X and
S is void.
c. B can recover only if B can return the money
paid by X to S.
d. None of the above
17. P appointed A as his agent to borrow P10,000 from
C. A borrowed P10, 000 and acted on his name.
Upon maturity, who is liable?
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 ACCTG 606 - LAW ON AGENCY
a. A only
b. P only
c. Both A and P
d. Contract is void
18. P, the owner of a piece of residential land orally
authorized A to sell the land for P500.00 with 5%
commission. Today, A sold the land to C. One day
later, P sold the same land to D. assuming that
both buyers are in good faith, who is the lawful
owner?
a. C, being the first buyer
b. C, because A was given authority by P
c. B, because the sale made by A to C is voidable
d. D, because the sale between A and C is void.
19. Three of the following requires a special power of
attorney, which is the exception.
a. Accept inheritance
b. To waive obligation gratuitously
c. To bind the principal in a contract of
partnership
d. None of the above
20. P authorized A, 16 year old to sell his car to B. A
sold the car to B for P100,000. One week after,
because the floating rate of peso, prices of car went
up. P now wanted to disavow the sale, claiming that
A, his agent was a minor and therefore the contract
is voidable and no liability is attached in the
contract.
a. Both A and P are jointly liable to B.
b. Only A is liable because he executed the agency
knowing for himself that he is a minor.
c. P and A are liable to B
d. None of the above
21. Three of the following questions are modes of
extinguishing an agency, which is the exception?
a. Insanity of the principal or agent.
b. Death of the principal but the agency is for the
interest of the principal and agent.
c. Accomplishment of agency
d. Dissolution of the firm or corporation which
entrusted or accepted the agency.
22. If an agent contracts in the name of his principal,
exceeding the scope of his authority, what would be
the status and effect of the contract?
a. Unenforceable
b. Void
c. Voidable
d. Valid
e. None of the above
23. A commission agent:
a. Has the option to act in his own name.
b. Generally, cannot sell on credit.
c. May be an agente del credere if he receives
guaranty commission.
d. All of the above
24. Without P’s authority, S sold P’s car to B in P’s
behalf
a. The transaction entered by S is unauthorized
therefore unenforceable.
b. The right of B is only against S as a rule.
c. The contract can be ratified, hence it is
considered as valid contract.
d. All of the above
25. The agent has no implied authority in three of the
following. Which is the exception?
a. If he is authorized to collect a debt from a
debtor, he has no authority to release the
guarantor of a debtor.
b. If he is authorized to collect a debt, he is not
authorized to receive partial payment.
c. But he has got implied authority to endorse the
check he received as partial payment.
d. None of the above
26. An agent without any express authority from the
principal appointed a sub- agent to help him carry
out the agency.
a. The substitution is void.
b. The substitution is valid but the agent is the
only one liable for the acts of the sub- agent.
c. Both agent and the sub-agent are liable to the
principal for the acts of the sub-agent under
the valid substitution.
d. The substitution is valid but the substitute is
the only one liable for his own acts.
e. None of the above.
27. In three of the following, a special power of attorney
is required, EXCEPT
a. To obligate the principal as guarantor.
b. To effect novations which put an end to
obligation already contracted before the
agency.
c. To borrow money not necessary for the
preservation of the property under
administration.
d. To lease real property to another person for one
year.
28. In agency, an agent represents
a. A person who is capacitated
b. A person who is incapacitated
c. Heirs and creditors of the estate of the debtor
d. Judicial court
e. None of the above
29. Without P’s authority, A, an agent, sold P’s car to X
in P’s behalf. The contract is
a. Unauthorized
b. Unenforceable
c. Subject to ratification
d. All of the above
30. An agent with general powers of administration
given to him by the principal in writing, desirous of
improving the financial condition of his principal,
two parcel of rice field, one for less than the price
appearing in the inventory prepared by the
principal, and the other for double the price that
appeared in the said inventory.
a. The sale for double the price appearing in the
inventory is binding upon the principal.
b. The two contracts cannot be enforced against
the principal.
c. The sale for less than the price appearing in the
inventory is binding upon the principal.
d. Both contracts are binding upon the principal.
e. None of the above.
31. Which of the following statements is true?
a. If the principal appoints an agent in writing
with respect to the sale of a piece of land and
the latter sold it to a buyer orally, the contract
between the agent and the buyer is void.
b. A contract of agency is generally gratuitous.
c. To lease personal property to another person
for more than one year does not require a
special power of attorney.
d. The insolvency of the principal but not the
agent shall extinguish the agency.
32. A guarantee commission agent
a. Bears the risk of collection on the same terms
agreed upon with the purchaser.
b. Is liable to the principal even if the buyer is
really insolvent.
c. Is liable for damages if he will not collect the
credit on time.
d. Is entitled to another commission aside from
ordinary commission.
e. All of the above.
33. Agency may be created by
a. Appointment
b. Ratification
c. Estoppel
d. Necessity
e. All of the above
34. P appointed A as his special agent to sell a specific
land for P10,000. P sends A his papers of
appointment including a letter addressed to X
notifying the latter of the appointment of A as his
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agent. Ten days after, P revoked the agency and
published it in a newspaper of general circulation.
X did not read the newspaper publication, but has
got actual knowledge of the revocation. Later, A and
X transacted business. Is the act of A binding
against P?
a. Yes, because a and X are in good faith.
b. No, X having knowledge of the revocation is
considered in bad faith.
c. Yes, because X was not given a special notice
of revocation.
d. Yes, the appointment of A is special
information, the revocation must also be by
special revocation.
35. A appoints B as his agent to sell his land, which of
the following is valid?
a. The authority of B is in writing but B mortgages
it also in writing.
b. The authority of B from A is by way of letter and
B sells the land to C in writing.
c. The authority of B is oral and B sells the land
to C for P50, 000 in a written contract of sale.
d. The authority of B is in writing but the sale of
the land in writing was made beyond the period
expressly set forth by A.
36. The “power to sell” includes three of the following.
Which is the exception?
a. The power to execute the necessary transfer
documents.
b. The power to sell on credit.
c. The power to receive the price, unless he was
authorized to solicit orders only.
d. The power to fix the place, time, and mode of
delivery.
37. If P pleads X to believe that A is his (P’s) agent, as
a matter of fact such is not true, A acts on such
misrepresentation, there is
a. An implied agency
b. An agency by estoppel
c. An agency by necessity
d. An express agency by words spoken
38. M company wrote a circular letter to its customers
introducing a certain A as its duly authorized
agent. X, a customer, dealt or transacted business
with A. later, A’s authority was revoked and was
published in a newspaper of general circulation.
Notwithstanding his knowledge of such revocation,
X continues to transact business with M through
A. Is M Company still liable for the agent act after
even revocation?
a. Yes, because the revocation was not given in
the same way the power was granted.
b. No more, because the third person (X) is in bad
faith.
c. No more, because the transaction that will be
entered after revocation will be void.
d. None of the above.
39. Considered “mere acts of administration”, which an
agent is authorized to do if given an agency
couched in “general term”. Which of the following
is the exception?
a. To sue for the collection of debts and to engage
services of a counsel to preserve the ownership
and possession of the principal’s property.
b. To give customary gifts for charity or to
employees in the business managed by the
agent.
c. Unregistered lease of real property to another
person for one year.
d. None of the above.
40. An implied agency may be created by
a. Ratification
b. Lack of action by the principal
c. Silence of the principal
d. All of the above.
41. P appointed A to sell the former’s car for P200,000.
A sold the car to X for P200, 000 but A acted in her
own name. After delivery, X inspected the car and
she found hidden defects in the car. Can X file an
action against P even when A acted in her own
name?
a. No, under “caveat emptor” let the buyers
beware.
b. Yes, because the contract is involving property
belonging to the principal.
c. No, because A acting in her own name not of
the principal.
d. No, because the contract of sale is already
perfected.
42. P appointed orally as his agent to sell his car for
P10, 000. A sold the car to X acted in his (A’s) name.
If upon delivery, the car has hidden defects, is P
liable?
a. No, because the contract is unenforceable, it is
orally entered into.
b. Yes, because the thing belongs to the principal.
c. No, because the agent acted in his name.
d. None of the above.
43. P appointed A as his agent orally to sell his parcel
of land for P10, 000. Five days after, A sold B the
parcel of land for P8, 000 by means of public
instrument executed between A and B. what is the
effect and the status of sale between A and B?
a. The sale is valid because it was executed in a
public instrument.
b. The sale is unenforceable because the agent
acted beyond the scope of his authority for
selling the land for less than the price
instructed.
c. The sale is void because the appointment of the
agent is oral.
d. The sale can be ratified although the
appointment of A is oral, because the sale by A
to C is in a public instrument.
44. A special power to sell includes the power to
a. Mortgage
b. Barter
c. Sell on credit
d. None of the above
45. Bears risk of collecting from the buyer the price of
the sale.
a. Commission agent
b. Delegacion
c. Quasi- tradition
d. Agente del credere
e. None of the above
46. P appointed A as his agent with general powers on
January 1. The next day, X transacted business
with A. On January 5, P revoked the agency and
published in a newspaper of general circulation.
After five days, X consummated another
transaction with A. Is the act of A binding against
P?
a. Yes, because X is in good faith.
b. No, because the agency is considered revoked
and its publication is a sufficient warning.
c. No, because the power is general, there must
also be a special power.
d. Yes, because there was no special notice sent
to X.
47. It is a contract where in a person binds himself to
render special service or to do something in behalf
of another with consent of the latter.
a. Contract of piece of work
b. Contract of service
c. Contract of agency
d. Contract of exchange
48. Agency is extinguished by any of the following
causes, EXCEPT
a. By its revocation
b. By withdrawal of the agent
c. By the death of the agent or of the principal
d. None of the above
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 ACCTG 606 - LAW ON AGENCY
49. The principal is not liable for the expenses incurred
by the agent.
a. If the agent acted in contravention of the
principal’s instruction.
b. Expenses were due to the fault of the agent.
c. Agent incurred them knowing that an
unfavorable result would ensue and the
principal was not aware thereof.
d. All of the above
50. P delivered to A P10,000 piece of Cebu fabricated
shell craft jewelry for the purpose of selling them at
P1.00 each. Out of the proceeds of the expected
sale, A is to receive a 10% commission. After three
days, however, A sold all the items at P1.50 each to
B, but on 30-day credit. Under the situation
a. A must pay P10,000 immediately.
b. A cannot be compelled to pay at all.
c. A must pay P15,000 immediately.
d. A must pay P15, 000 immediately and ap10,
000 after 60 days.
e. A must pay P10, 000 after collection from B.
51. P appointed A as his agent to sell his specific car in
cash for P10,000 with 10% commission. A using
persuasive skill was able to sell it for P15,000 on
credit. After the sale but before payment of the
buyer.
a. A must give P10,000 only.
b. A must give P10, 000 minus the commission.
c. A must give P15, 000 minus the commission.
d. A must give P15, 000 and in turn is to give A
P5, 000 as a commission.
52. Today, P appointed A1 as his agent covered by
general power to lease his car to X for 6 months.
The next day, P appointed A2 with special power to
lease the same car to X for 5 months. On the third
day, P directly transacted business with X leasing
the car for two months. What is the effect of agency
between the parties?
a. The appointment of A1 is valid because it has
got a prior date.
b. The appointment of A2 is the one that is valid
because it is covered by a special power.
c. The agency of A1 and A2 are considered
revoked because the principal directly
transacted with X.
d. None of the above.
53. A passenger bus while in motion collided with
another bus. X, the conductor of the bus was bodily
injured. D, the driver, although not authorized,
engaged the services of a physician in the name of
the company. In here, there is an
a. Implied agency
b. Agency by estoppel
c. Agency by necessity
d. None of the above
54. In agency, the agent represents
a. A person who is capacitated
b. A person who is incapacitated
c. Heir and creditors or the estate
d. The judicial court
55. A appointed B as his agent to sell his specific car
for P 300,000 with 10% commission. A, with his
skills was able to sell the car for P 300,000. –
320K
a. B must give to A P 320,000
b. B must give to A P 300,000
c. B must give to A P 300,000 minus the 10%
commission
d. B must give to A P 320,000 minus the 10%
commission
56. If an agent enters into a contract in the name of his
principal, exceeding the scope of his authority, the
contract is
a. Voidable
b. Unenforceable
c. Rescissible
d. Void
57. On day 1, A appointed B as his agent covered by a
general power to lease his car to Z for eight months.
On the day 2, A appointed C as his agent covered
by a special power to lease the same car to S for 4
months. On day 3, A directly transacted business
with S leasing the car for two months. Which is
correctly?
a. The appointment of A is valid because it is
covered by a general power
b. The appointment of C is valid because it is
covered by special power
c. The appointment of B and C are considered
revoked because the principal directly
transacted with S
d. The appointment of B is valid because it has
got a prior date
58. Not a fundamental obligations of the agent
a. Sacrifice his interest and give it to the principal
if there is a conflict
b. To render an accounting of the transaction
c. Should not carry out the agency even if that the
instruction, if he knew it would result in a loss
or damage to the principal
d. Can be the borrower if he is authorized to land
59. A appointed B as his agent to sell his car for
P250,000. B sold the car to C for P250,000 but B
acted in his own name. After delivery, C inspected
the car and she found hidden defects in the car. Is
A, as principal, liable to C even if B acted in his own
name
a. No, applying “caveat emptor” or let the buyer
beware
b. Yes, because this is a contract involving
property belonging to the principal
c. No, because the contract of sale is between B
and C
d. No, because B acted in his name, not of the
principal
60. To improve the financial condition of his principal,
an agent with general powers of administration
given to him by the principal, an agent with general
powers of administration given to him by the
principal in writing, sold two parcels of land, one
for lease than the price appearing in the inventory
prepared by the principal and the other for double
the price that appeared in the aforesaid inventory
a. Both contracts cannot be enforced against the
principal
b. Both contracts are binding upon the principal
c. The sale for double the price appearing in the
inventory is binding upon the principal
d. The sale for less than the price appearing in
the inventory is binding upon the principal
61. Not a mode of extinguishing an agency
a. Accomplishment of agency
b. Death of the principal, and the agency is for the
interest of the principal and agent
c. Insanity of the principal or agent
d. Dissolution of the firm or corporation which
entrusted or accepted the agency
62. Bear the risk of collecting from the buyer the price
of the sale
a. Commission agent
b. Delegation
c. Del credere agent
d. Ex promission
63. It is a contract wherein a person binds himself to
render some services in representation or on behalf
of another, with the consent or authority of the
latter
a. Agency
b. Contract of service
c. Contract of piece work
d. None of these
64. Agency can be revoked
a. When a bilateral contract depends upon it
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 ACCTG 606 - LAW ON AGENCY
b. If it is the means of fulfilling an obligation
already contracted
c. If a partner is appointed managing partner in
the articles of partnership and his removal is
unjustifiable
d. When the principal directly manages the
business entrusted to the agent
TRUE OR FALSE
1. In agency, there is fiduciary relation between two persons
because it is based on utmost trust and confidence.
2. If the agent it incapacitated, the contract between him and the
third person is binding against the principal, provided the
principal is capacitated.
3. The general rule is that a guardian cannot purchase the
property of a person under guardianship. However, he may do
so at a public auction when done through his agent.
4. To lease real property to another person, the authority of the
agent must be in a special power of attorney, if the lease is for
one year.
5. A commission agent is an agent having the option of acting in
his own name or in that of his principal.
6. The limits of the agent’s authority shall not be considered
exceeded should it have been performed in a manner more
advantageous to the principal that specified by him.
7. 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.
8. 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.
9. If the agent is prohibited from appointing a sub- agent, any
act executed by the latter is unenforceable on the part of the
principal.
10. The agency shall remain in full force and effect even after the
death of the principal, if it has been constituted in the common
interest of the latter and of the agent, or in the interest of a
third person who has accepted the stipulation in his favor.
11. 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 excuse such acts as
he may consider appropriate, or even though the agency
should authorize a general and unlimited management.
12. The agent is called upon to sacrifice his interest and give it to
the principal if there is a conflict of interest.
13. The agent is responsible for the acts of his sub-agent, if the
agent was not given the power to appoint one and he is not
also prohibited from appointing one.
14. If the agent dies, the heirs must notify the principal
immediately, and must continue the objective of the agency
until it is accomplished or until the principal appoints a new
agent.
15. If the principal directly manages the business entrusted to the
agent, there is implies revocation of the agency.
16. In agency, there is a meeting of minds between the parties,
expressly or impliedly; while in negotiorum gestio, there is no
meeting of minds between the two persons because the
relation is created by operation of law.
17. If an agent acts in his own name, the principal has no right of
action against the persons with whom the agent has
constructed; neither have such persons against the principal.
In such case, the agent is the one directly bound in favor of
the persons with whom he has constructed; as if the
transactions were his own, except when the contract involves
things belonging to the principal.
18. Every agent is bound to render an account of his transaction
and to deliver to the principal whatever he may have received
by virtue of the agency, even though it may not be owning to
the principal.
19. 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.
20. An agency cannot be revoked if a bilateral contract depends
upon it, or if it is the means of fulfillment an obligation already
contracted, or if a partner is appointed manager of a
partnership in the contract of partnership and his removal
from the management is unjustifiable.
21. In agency, the agent represents an incapacitated person.
22. When a sale of a piece of land is made through an agent, his
authority must be in writing otherwise, the sale is
unenforceable.
23. When two or more principals have granted a power of attorney
for a common transaction, any one of them may revoke the
same without the consent of others.
24. Anything done by the agent, without knowledge of the death
of the principal or of any other cause which extinguishes the
agency, is valid and shall be fully and effective with respect to
third persons who may have contracted with him in good faith.
25. To make customary gifts for charity, the authority of the agent
must be a special power of attorney.
26. If the agent acted in the name of the principal, but without
authority, the contract is unenforceable subject to ratification.
27. In agency, the “authority” given to agent is a mandate ; while
“power” refers to the extent of the mandate
28. The agent if authorized to borrow money can be the lender,
but generally he cannot be the borrower if he is authorized to
lend.
29. The responsibility of two or more agents, even though they
have been appointed simultaneously, is not solidary, if
solidary has not been expressly stipulated.
If solidarity has been agreed upon, each of the agents is
responsible for the non-fulfillment of the agency, and for the
fault or negligence as his fellow agents, except in the latter
case when the fellow agent acted beyond the scope of their
authority.
30. Should the commission agent receive on a sale, in addition to
the ordinary commission, another called a guarantee
commission, shall bear the risk of collection and shall pay the
principal the proceeds of the sale on the terms agreed upon
with the purchaser.
31. When a sale of a piece of land or any interest therein through
an agent, the authority of the latter shall be in a public
instrument, otherwise the sale shall be void.
32. Agency is presumed to be without compensation values there
is proof to the contrary.
33. A special power to sell includes the power of mortgage and a
special power to mortgage includes the power sell.
34. Should there be a stipulation that the agent shall advances
the necessary funds, he shall be a bound to do so even when
the principal is insolvent
35. If the agent has been empowered to borrow money he may
himself be the lender at the current rate of interest and if he
has been authorized to land money at interest, he can borrow
it.
36. 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
37. The responsibility of two or more agents who have been
appointed simultaneously is solidarity.
38. When two or more principals have more granted a power of
attorney for a common transaction, any one of them may
revoke the same provided it is with the consent of the others.
39. The limits of agent’s authority shall be considered exceeded
even if it have been performed in a manner more advantageous
to the principal than that specified by him
40. If the agent acts in his own name, he is directly bound as if
the transaction were his own and that the contract shall not
be valid between the principal and the third party.
41. In the execution of the agency, the agent shall is bound to
observe the diligence of a father of a good family.
42. In case a person declines an agency, he is bound to observe
the diligence of a father of a good family in the custody and
preservation of the goods forwarded to him by the owner until
the latter should appoint an agent.
43. If the agent contracts in the name of the principal and the does
not ratify the contract, the contract shall be void if the party
with whom the agency contracted is aware of the limits of the
powers granted by the principal.
44. A third person cannot set up the fact that the agent has
exceeded his powers, if the principal has ratified, or has
signified his willingness to ratify the agent’s acts.
45. Every stipulation exempting the agent from the obligation to
render an account shall be void.