AGENCY

NATURE, FORM AND KINDS OF AGENCY

Art. 1868. 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.

Agency is a fiduciary relationship which implies a power in an agent to contract with a third person on behalf of a principal.The distinguishing feature of agency are its representative capacity and its derivative authority. He who acts through another acts himself or He who does a thing by an agent is considered as doing it himself. By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence.The PURPOSE of agency is to extend the personality of the principal through the facility of the agent to render some service to do or something.

ACTS that may be/NOT be DELEGATED to AGENTS

The general rule is that what a man may do in person, he may do thru another.

Some acts, however, cannot be done through an agent.

Personal Acts The right to vote during election The making of a will Statements which are required to be made under oath A member of the BOD or trustees of a corporation cannot validly act by proxy An agent cannot delegate to a sub-agent the performance of acts which he has

been appointed to perform in person.Criminal acts or acts not allowed by law

An alien cannot purchase a land through a Filipino agent

Characteristic of a contract of agency

ConsensualPrincipalNominateUnilateralPreparatory

Parties to the contract

Principal – one whom the agent represents and from whom he derives his authority; he is the person represented.

Agent – one who acts for and represents another; he is the person acting in a representative capacity.

AGENCY distinguished from GUARDIANSHIP

While the agent derives his authority from his principal, the guardian, although a guardian acts for and on behalf of his ward, does not derive his authority so to act from the ward.The relation of principal and agent is founded upon consent of the parties thereto, while that of guardian and ward may be created irrespective of the consent or capacity of the ward.

Essential elements of agency

There is consent, express or implied, of the parties to establish the relationshipThe object is the execution of a juridical act in relation to third personsThe agent acts as a representative and not for himself; andThe agent acts within the scope of his authority

In addition, the parties must be competent to act as principal and agent. Consideration is not required.

Art. 1869. KINDS of Agency

AS TO MANNER OF ITS CREATION

Agency may be

Express – one where the agent has been actually authorized by the principal, either orally or in writing.Implied - one which is implied from the acts of the principal,

from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf

without authority.

An agency may exist by operation of law.

The principal cannot deny the existence of the agency after third parties, relying on his conduct, have had dealings with the supposed agent. The method of creating an agency is known as agency by estoppel or implication.

Agency may be oral, unless the law requires a specific form.

AS TO ITS CHARACTER

GratuitousCompensated or onerous

AS TO EXTENT OF BUSINESS COVERED

GeneralSpecial

AS RO AUTHORITY CONFERRED

Couched in general termsCouched in specific terms

AS TO ITS NATURE AND EFFECTS

Ostensible or representativeSimple or commission

The usual method an agency is created is by contract which may be oral, written, or implied.

There are some provisions of law which require certain formalities for particular contracts.

When the form is required for the validity of the contractWhen it is required to make the contract effective against third personsWhen it is required for the purpose of proving the existence of a contract such as those provided in the Statute of Frauds

Agency is generally not presumed. The relation between principal and agent must exist as a fact.

A presumption of agency may arise, however, in those few cases where an agency may arise by operation of law or to prevent unjust enrichment.

Art. 1870. FORMS of acceptance by agent

Acceptance by the agent may also be express, or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances. (n)

Art. 1871. IMPLIED ACCEPTANCE between persons PRESENT

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)

A power of attorney is an instrument in writing by which one person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of the principal.

The principal personally delivers the power of attorney to the agent.

Art. 1872. IMPLIED ACCEPTANCE between persons ABSENT

Between persons who are absent, the acceptance of the agency cannot be implied from the silence of the agent, except:

When the principal transmits his power of attorney to the agent, who receives it without any objection;When the principal entrusts to him by letter or telegram a power of attorney with respect to the business in which he is habitually engaged as an agent, and he did not reply to the letter or telegram.

Or the acceptance could be inferred from his acts which carry out the agency as when he begins to act under the authority conferred upon him.

The principal transmits the power of attorney to the agent.

Art. 1873. Communication of existence of agency

If a person specially informs another, the person appointed as agent is considered as such with respect to the person who received the special informationIf it states by public advertisement that he has given a power of attorney to a third person, the agent is considered as such and thereby becomes a duly authorized agent, in the former case, and in the latter case with regard to any person.

Manner of revocation of agency

The power shall continue to be in full force until the notice is rescinded in the same manner in which it was given.

Art. 1874. Sale of land through agent

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.

Art. 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary.

A person who agrees to act as an agent without compensation is a gratuitous agent.

Right of agent in case of double agency

An agent acting at once for both contracting parties assumes a double agency.

With knowledge of both principals – Such agency is disproved by law unless the agent acted with full knowledge and free consent of both principals, or unless his employment was merely to bring the parties together. In this case, recovery may be had by the agent.Without knowledge of both principals – In case of such double employment the agent can recover from neither, where his employment by either is concealed from or not assented to by the other.With knowledge of one principal

Art. 1876. An agency is either

General - comprises all the business of the principal.Special – when it involves one or more specific transactions.

Classes and kinds of agents according to the NATURE and EXTENT of their AUTHORITY

Universal agent – one employed to do all acts that the principal may personally do, and which he can lawfully delegate to another the power of doing.

Unlimited general agent.General agent – one employed to transact all the business of his principal, or all business of a particular kind or in a particular place, or in other words, to do all acts, connected with a particular trade, business, or employment.

He has authority to do all acts connected with or necessary to accomplish a certain job.

A special or particular agent – one authorized or act in one or more specific transactions, or to do one or more specific acts, or to act upon a particular occasion.

He has less power than a general agent.

Special types of agents

Attorney at lawAuctioneerBrokerFactor (commission merchant)Cashier in bankAttorney-in-fact

General vs. Special Agent

Scope of authorityContinuous nature of service authorized

A general agent is one who is authorized to conduct a series of transactions over time involving a continuity of service.

A special agent is one authorized to conduct a single transaction or a series of transactions not involving continuity of service and covering a relatively limited period of time.

Extent to which agent may bind principal A general agent may bind his principal by an act within the scope of his authority

although it may be contrary to his special instructions. A special agent cannot bind his principal in a manner beyond or outside the specific acts

which he is authorized to perform on behalf of the principal.

Art. 1877. Agency couched in general terms

An agency couched in general terms comprises only acts of administration and an express power is necessary to perform any act of strict dominion, even if the principal should

state that he withholds no power or that the agent may execute such acts as he may consider appropriate, or Even though the agency should authorize a general and unlimited management.

Art. 1878. Special powers of attorney are necessary in the following cases:

ACTS OF STRICT DOMINION

To make such payments as are not usually considered as acts of administration;To effect novations which put an end to obligations already in existence at the time the agency was constituted;To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired;To waive any obligation gratuitously;To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration;

To make gifts, except customary ones for charity or those made to employees in the business managed by the agent;To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration;To lease any real property to another person for more than one year;To bind the principal to render some service without compensation;To bind the principal in a contract of partnership;To obligate the principal as a guarantor or surety;To create or convey real rights over immovable property;To accept or repudiate an inheritance;To ratify or recognize obligations contracted before the agency;Any other act of strict dominion.

Art. 1879. Scope of authority to sell/to mortgage

A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell.

Art. 1880. Scope of special power to compromise/ to submit to arbitration

While the principal may have confidence in the agent’s judgment, the arbitrator designated may not possess the trust of the principal.

A special power to compromise does not authorize submission to arbitration.

Art. 1881. AUHORITY

The agent must act within the scope of his authority. He may do such acts as may be conducive to the accomplishment of the purpose of the agency.

Authority – the power of the agent to affect the legal relations of the principal by acts done in accordance with the principal’s manifestation of consent to him.

The authority of the agent is the very essence of the principal and agent relationship.

KINDS of Authority

Actual – when it is actually granted, and it may be express or impliedExpress – when it is directly conferred by wordsImplied – when it is incidental to the transaction or reasonably necessary to accomplish the main purpose of the agency, and, therefore, the principal is deemed to have actually intended the agent to possess although the principal has said nothing about the particular aspect of the agent’s authority.Apparent or ostensible (authority by estoppel)

When it is conferred by words, conduct or even silence of the principal which causes a third person reasonably to believe that a particular person, who may or may not be the principal’s agent, has actual authority to act for the principal.

General – when it refers to all the business of the principal

Special – when it is limited only to one or more specific transactionsAuthority by necessity or by operation of law - when it is demanded by necessity. The agency terminates when the emergency has passed.

Art. 1882. 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 than that specified by him.

He is authorized to do such acts as may be conducive to the accomplishment of the purpose of the agency. This rule is of evident equity.

WHEN Principal bound by act of agent as to third persons and as to the agent himself

The agent must act within the scope of his authorityThe agent must act in behalf of the principal

WHEN a person NOT bound by act of another

The latter acts without or beyond the scope of his authority in the former’s nameThe latter acts within the scope of his authority but in his own name, except when the transaction involves things belonging to the principal

Such act is unauthorized and, therefore, unenforceable, whether or not the party with whom the agent contracted was aware of the limits of the agent’s power, unless the principal ratifies the transaction before it is revoked by the other contracting party or is in estoppel to deny the agent’s authority.

Art. 1883. KINDS of PRINCIPAL

If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal.

In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the action were his own, except when the contract involves things belonging to the principal.

The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent.

Disclosed Principal – if at the time of the transaction contracted by the agent, the other party thereto has known that the agent is acting for a principal and of the principal’s identity.Partially disclosed Principal – if the other party knows or has reason to know that the agent is or may be acting for a principal but is unaware of the principal’s identity.Undisclosed principal – if the party has no notice of the fact that the agent is acting as such for a principal.

OBLIGATIONS OF THE AGENT

Art. 1884. The agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his non-performance, the principal may suffer.

He must also finish the business already begun on the death of the principal, should delay entail any danger.

Art. 1885. Obligation of person who declines an agency

In case a person declines an agency, he is bound 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 until the latter should

appoint an agent or Take charge of the goods.

This rule is based on equity

Art. 1886. Obligation to advance necessary funds

As a rule, the principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency.

Should there be a stipulation that the agent shall advance the necessary funds, he shall be bound to do so except when the principal is insolvent.

The exception is based on the principal’s obligation to reimburse the agent. Incidentally, the insolvency of the principal is a ground for extinguishment of agency.

Art. 1887. Instruction

In the execution of the agency, the agent shall 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.

Instructions are private directions which the principal may give the agent in regard to the manner of performing his duties as such agent but of which a third party is ignorant.

Art. 1888. When agent shall not carry out agency

The agent, upon acceptance of the agency, is not bound in all cases to carry out the agency in accordance with the instructions of the principal.

An agent shall not carry out an agency if its execution would manifestly result in loss or damage to the principal.

The duty of the agent who is merely an extension of the personality of the principal is to render service for the benefit of the principal and not to act to his detrimental.

An agent must exercise due diligence in carrying out the agency.

Art. 1889. Obligation not to prefer his own interests to those of principal

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.

Agency, being a fiduciary relation, the agent is required to observe utmost good faith and loyalty towards his principal. He must look after the principal’s interests as if they were his own.The underlying basis of the rule precluding an agent from engaging in self-dealing is to shut the door against temptation and keep the agent’s eye single to the rights and welfare of his principal.

The principal, however, may waive the benefit of the rule so far as he is concerned, if he does so with full knowledge of the facts, but in the absence of such waiver, the rule is absolute.

However, where the agent’s interests are superior, such as where he has a security interest in goods of the principal in his possession, he may protect his interest even if in so doing he disobeys the principal’s orders or injures his interest.

An agent, to be sure, is not required to expose himself to great physical risks not within the contemplation of the parties, or to perform services when he is ill.

Art. 1890. Obligation not to loan to himself

The agent cannot, without a special power of attorney, loan or borrow money.

If the agent has been empowered to borrow money, he may himself be the lender at the current rate of interest.

There is no danger of the principal suffering any damage since the current rate of interest would have to be paid in case if the loan were obtained from a third person.

If he has been authorized to lend money at interest, he cannot borrow it without the consent of the principal.

The agent may prove to be a bad debtor.

There is here a possible conflict of interest. The transaction may thus be prejudicial to the principal.

Art. 1891. Obligation to render accounts

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.

Every stipulation exempting the agent from the obligation to render an account shall be void.

This includes gifts from the third party in connection with the agency.It is immaterial whether such money or property is the result of the performance or violation of the agent’s duty, if it be the fruit of the agency.

Not only that the principal has to assume the responsibility of the transaction, but also because the agent cannot be permitted to derive advantage from his own default.

Art. 1892. Power of agent to appoint sub-agent or substitute

The agent may appoint a substitute if the principal has not prohibited him from doing so ; but he shall be responsible for the acts of the substitute:

When he was not given the power to appoint one;When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of the principal shall be void.

A sub-agent is a person employed or appointed by an agent as his agent, to assist him in the performance of an act for the principal which the agent has been empowered to perform.

Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution.

An agent may not delegate to a subagent where the work entrusted to him by the principal to carry out requires special knowledge, skill, or competence unless he has been authorized to do so by the principal.This right of action against the substitute is an exception to the general rule that contracts are binding only between the contracting parties, their assigns and heirs.

Art. 1894. Necessity of concurrence where there are two or more agents

The presumption is that an obligation is joint.

The responsibility of two or more agents, even though they have been appointed simultaneously, is not solidary, if solidarity has not been expressly stipulated.

Art. 1895. If solidarity has been agreed upon, each of the agents is responsible for

the non-fulfillment of agency even though in this case, the fellow agents acted beyond the scope of their authority, and The fault or negligence of his fellow agents, except in this case when the fellow agents acted beyond the scope of their authority.

The innocent agent has a right later on to recover from the guilty or negligent agent. An agent who exceeds his power does not act as such agent, and, therefore, the principal assumes no liability to third persons. Since this is so, solidary liability cannot be demanded by the principal.

Art. 1896. Liability of agent for interest

The agent owes interest on the sums he 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 from the date of the extinguishment thereof.

Demand not essential for delay to exist.

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.

Art. 1898. Effect where third person aware of limits of agent’s powers

If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he undertook to secure the principal's ratification.

Art. 1899. Effect of ignorance of agent

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 to circumstances whereof he himself was, or ought to have been, aware.

Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent.

Art. 1901. Ratification by the principal

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.

The principal is not bound by the contract of his agent should the latter exceed his power. The contract is unenforceable but only as regards him.The ratification shall have retroactive effect. It relates back to the time of the act or contract ratified and is equivalent to original authority.

Art. 1902. Presentation of power of attorney or instructions as regards agency

As a rule, a third person deals with an agent at his peril. Hence, he is bound to inquire as to the extent of the agent’s authority, and this is especially true where the act of the agent is of an unusual nature.

Ignorance of the agent’s authority is no excuse.

A third person with whom the agent wishes 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. A third person is not bound and cannot be affected by the private or secret orders and instructions of the principal.

Such secret orders or instructions cannot be invoked as against third parties if the agent has apparent authority.

Art. 1903. Fact or commission agent

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.

A fact or commission agent is one whose business is to receive and sell goods for a commission and who is entrusted by the principal with the possession of goods to be sold, and usually selling in his own name.

He may act in his own name or in that of the principal.An ordinary agent need not have possession of the goods of his principal, while the commission agent must be in possession.

Art. 1904. The commission agent who handles goods 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.

To prevent any possible confusion or deception. He may not commingle the goods without authority.Where he violates that duty by mingling the property with his own, he becomes a debtor of the principal and liable to him for any losses suffered as a result of the mingling.

EXCEPTIONS

By custom, some agents, such as auctioneers, normally are permitted to mingle their principal’s property with their own.Some agents, such as collecting banks, are permitted to mingle the funds of their principal with their own and the property of other principals.

Art. 1905. Right of principal where sale on credit made without authority.

The commission agent cannot, without the express or implied consent of the principal, sell on credit. If such sale is made without authority, the principal is given two alternatives.

He may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit, which may result from such sale.

The principal cannot be allowed to enrich himself at the agent’s expense.He may ratify the sale on credit in which case it will have all risks and advantages to him.

Art. 1906. Obligation of commission agent where sale on credit authorized

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 insofar as the principal (not third parties) is concerned.

Art. 1907. Meaning and purpose of guarantee commission

Guarantee commission is one where, in consideration of an increased commission, the factor or commission agent guarantees to the principal the payment of debts arising through his agency.

An agent who guarantees payment of the customer’s account in consideration of the higher commission is called a del credere agent.

To compensate the agent for the risks he will have to bear in the collection of the credit due the principal.A del credere agent may sue in his name for the purchase price in the event of non-performance by the buyer.

Should the commission agent receive on a sale, in addition to the ordinary commission, another called a guarantee commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser.

He is liable to the principal if the buyer fails to pay or is incapable of paying. He principal may sue the buyer in his own name notwithstanding the del credere commission, so the latter amounts to no more than a guaranty.

Art. 1908. Obligation of commission agent to collect credits of principal.

The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages, unless he proves that he exercised due diligence for that purpose.

This article does not apply to a case where there is a guarantee commission.

Art. 1909. The agent is responsible not only for fraud, 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.

OBLIGATIONS OF THE PRINCIPAL

Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.

The duties and liabilities of the principal are primarily based upon the contract and the validity of the contract between them.In addition to his contractual duties, the principal is under an obligation to deal fairly with his agent who owes the same duty to his principal.The primary obligation of the principal to the agent is simply that of complying with the terms of their employment contract, if one exists.

SPECIFIC OBLIGATIONS of principal to agent

The contract creating the agency normally defines the specific obligation or duties of the principal to an agent. In the absence of express agreement, the law imposes upon the principal certain obligations to his agent, among which are the following

CARIP

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.To advance to the agent, should the latter so request, the sum necessary for the execution of the agency.To reimburse the agent for all advances made by him, provided the agent is free from fault.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.To pay the agent the compensation was specified, the reasonable value of the agent’s services.

Agency from necessity or by operation of law – The authority is limited to the necessity and ceases to exist when the emergency has passed.

LIABILITY OF THIRD PERSONS TO PRINCIPAL

An agent is the instrumentality of the principal whose primary design is to obtain rights against third parties.

Since notice by a third party to the agent is notice to the principal, the third party is not liable for damages for failure of the agent to give notice to his principal.

REPRESENTATION, essence of agency

It is not enough, however, that the agent should act within the scope of his authority but must also act in a representative capacity in the principal’s name, otherwise, the principal assumes no liability.

RATIFICATION

The principal must have capacity to ratify the unauthorized act.It is the adoption or affirmance by a person of a prior act which did not bind him, but which was done or professed to be done on his account thus giving effect to the acts as if originally authorized.

CONDITIONS for Ratification

The principal must have the capacity and power to ratifyHe must have had knowledge or had reason to know of material or essential facts about the transaction.He must ratify the acts in its entiretyThe act must be capable of ratification The act must be done in behalf of the principal

FORMS of Ratification

Express – the principal simply informs the agent, the third party, or someone else of his intention to honor the agent’s unauthorized dealings.Implied – by words or conduct that amounted to ratification or even by silence or inaction where under the circumstances a reasonable person would have expressed objections to what the agent’s had done.

Ratification is based on waiver - the intentional relinquishment of a known right.

Moreover, if a writing I required to grant an authority to do a particular act, ratification of the act must also be in writing.

Persons ENTITLED TO RATIFY

The principal must have the capacity and power to ratifyA principal is incapable of ratifying an act if his own position has, in the interval between the time the agent performed the act and the time when the ratification is supposed to have occurred, so altered that he is no longer capable of doing the original act.

KNOWLEDGE by ratifier of material facts essential (Full and Complete knowledge)

In order to bind a principal by ratification, he must have been in possession of all the facts and must have acted in the light of such facts.The general rule is that ratification cannot be implied as against the principal who is ignorant of the facts.The general rule requires actual knowledge on the part of the principal, as a condition to the imposition upon him of the obligation of his agent’s unauthorized acts.

BURDEN TO show such KNOWLEDGE

Whoever, therefore, seeks to rely on a ratification is bound to show that ir was made under such circumstances as in law to be binding to the principal.

RATIFICATION MUST BE ENTIRE

The act must be ratified in its entirety or not at all. The principal cannot accept the benefits of a transaction and refuse to accept the obligations that are part of it.

ACTS THAT MAY BE RATIFIED

Valid/Void acts Acts which are absolutely void cannot be authorized nor ratified.

Voidable actsUnrevoked actsCriminal actsTortious acts

Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. (n)

Estoppel is a bar which precludes a person from denying or asserting anything contrary to that which has been established as the truth by his own deed or representation either express or limited.

ESTOPPEL vs. RATIFICATION

Art. 1912. Obligation to advance funds.

The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency.

Should the agent have advanced them, the principal must reimburse him therefor, even if the business or undertaking was not successful, provided the agent is free from all fault.

If the mission was executed with the diligence of a good father of a family, then the agent has complied with his duty; and if nothing less is required of him, neither is he expected to do more.

The reimbursement shall include interest on the sums advanced, from the day on which the advance was made.

If the principal fails to comply with his obligations, the agent will not be liable for the damage which, through his non-performance, the principal may suffer.Demand is not necessary in order that delay on the part of the principal shall exist.

Art. 1913. Obligation to indemnify agent for damages

The principal must also 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.

Since the principal receives the benefit of the agency and has a right to demand damages from the agent should the latter not perform the agency therefore such law is only corollary logical.No promise to indemnify will be implied for losses or damages caused by independent and unexpected wrongful acts of third persons for which the principal is in no way responsible.

Art. 1914. Right of agent to retain in pledge object of agency

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.

The agent is not entitled to the excess in case the things are sold to satisfy his claim and the proceeds thereof are more than the amount due.The lien of the agent is specific or particular in character, and not a general lien so as to give the agent a right to retain the principal’s goods for claims disconnected with the business of the agency.To entitle the agent to a lien, the funds or property against which it is asserted must be in his actual or constructive possession, and he must have acquired that possession lawfully and in his capacity as agent.The right of lien exists only in favor of the agent, and cannot be claimed by one to whom the agent delegates his authority where no privity exists between sub-agent and the principal.

Art. 1915. Nature of liability of two or more principals to their agents

Requisites:

There are two or more principalsThe principals have all concurred in the appointment of the same agentThe agent is appointed for a common transaction or undertaking

A transaction or undertaking is common to all principals if it is one as to which their interests are in accord and in harmony.

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.

The solidarity arises from the common interest of the principals and not from the act of constituting the agency.

Art. 1916. Rule where two persons contract separately with agent and principal

When two persons contract with regard to the same thing, one of them with the agent and the other with the principal, and the two contracts are incompatible with each other, that of prior date shall be preferred, without prejudice to the provisions of Article 1544.

“If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property”

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who, in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.”

Art. 1917. In the case referred to in the preceding article, if the agent has acted in good faith, the principal shall be liable in damages to the third person whose contract must be rejected. If the agent acted in bad faith, he alone shall be responsible.

Art. 1918. The principal is not liable for the expenses incurred by the agent in the following cases:

If the agent acted in contravention of the principal's instructions, unless the latter should wish to avail himself of the benefits derived from the contract;When the expenses were due to the fault of the agent;When the agent incurred them with knowledge that an unfavorable result would ensue, if the principal was not aware thereof;When it was stipulated that the expenses would be borne by the agent, or that the latter would be allowed only a certain sum.

MODES OF EXTINGUISHMENT OF AGENCY

RWDDAE

Art. 1919. Agency is extinguished:

By its revocation;By the withdrawal of the agent;By the death, civil interdiction, insanity or insolvency of the principal or of the agent;By the dissolution of the firm or corporation which entrusted or accepted the agency;

By the accomplishment of the object or purpose of the agency;By the expiration of the period for which the agency was constituted.

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.

Kinds of Revocation

Implied 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 When the principal after granting a general power of attorney to an agent, grants a special one

to another agent, there is implied revocation of the former as regards the special matter involved in the latterExpress Revocation

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.

Art. 1922. If the agent had general powers, revocation of the agency does not prejudice third persons who acted in good faith and without knowledge of the revocation. Notice of the revocation in a newspaper of general circulation is a sufficient warning to third persons.

Art. 1923. The appointment of a new agent for the same business or transaction revokes the previous agency from the day on which notice thereof was given to the former agent , without prejudice to the provisions of the two preceding articles.

Art. 1924. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.

Art. 1925. 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 the others.

Art. 1926. A general power of attorney is revoked by a special one granted to another agent, as regards the special matter involved in the latter.

Art. 1927. An agency cannot be revoked

if a bilateral contract depends upon it, or if it is the means of fulfilling 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.

Art. 1928. The agent may withdraw from the agency by giving due notice to the principal. If the latter should suffer any damage by reason of the withdrawal, the agent must indemnify him therefor , unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself.

Art. 1929. The agent, even if he should withdraw from the 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.

Art. 1930. 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.

Art. 1931. 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 effective with respect to third persons who may have contracted with him in good faith.

Art. 1932. If the agent dies, his heirs must notify the principal thereof, and in the meantime adopt such measures as the circumstances may demand in the interest of the latter.