LAW 3 MIDTERMS

• 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
• Fundamental Principles of Contract of Agency

  • The agent must act within the scope of his authority
  • The agent must act in representation of the principal
• Parties in Contract of Agency

  • Principal - one whom the agent represents and from whom he derives his authority
  • Agent - one who acts for and represents the principal, having derivative authority in carrying out the business of the latter
• Juridical persons can be principals and agents [Art. 1919(4)]
• Juridical persons that can be principals and agents

  • Corporations
  • Partnerships
  • Cooperatives
  • Joint ventures
• Characteristics of a Contract of Agency

  • Consensual - it is perfected by mere consent/meeting of the minds
  • Bilateral (if for compensation) - there is reciprocal rights and obligation of principal and agent; Unilateral (if gratuitous) - the agent only has the rights and obligations in an agency
  • Onerous - there is a valuable consideration; Agent (compensation); Principal (representation)
  • Nominate - there is a special designation or name given by the code
  • Preparatory - it is entered into as means to an end, i.e., the creation of other contracts
  • Principal - it can stand by itself without the need of another contracts
  • Representative Relation - since the agency is not inherent or permanent
  • Fiduciary Relation - it is based on trust and confidence
• Essential Requisites of a Contract of Agency

  • Consent or meeting of the minds, express or implied, of the parties to establish the relationship
  • Object - the execution of a juridical act in relation to third persons
  • The agent acts as a representative and not for himself
  • The agent acts within the scope of his authority
  • The agent must be competent
• Agency by estoppel


  A contract based on equity when one leads another to believe that a certain person is his agent, when as a matter of fact such is not true, and the latter acts on such misrepresentation, the former cannot disclaim liability, for he has created an agency by estoppel
• Agency by operation of law


  • 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 principal
  • In a contract of partnership, all the partners are considered agents (of each other) of the partnership when the manner of management has not been agreed upon by them
• Implied consent by principal


  The appointment of an agent may be implied from his acts, from his silence or lack of action, or from his failure to repudiate the agency, knowing that another person is acting on his behalf without authority
• The appointment may be oral, unless the law requires a specific form [Art. 1869]
• Exceptions where the law requires a specific form for the appointment of an agent

  • When a sale of piece of land or any interest therein is through an agent, in which case the authority shall be in writing; otherwise the sale is void [Art. 1874]
  • When the law requires a special power of attorney [Art. 1878]
• Implied consent by agent

  Agent's acceptance may also be implied from his acts which carry out the agency, from his silence or inaction according to the circumstances, or when the principal delivers his power of attorney to the agent and the latter receives it without objection (between persons present) or when the principal transmits his power of attorney to the agent who receives it without objection (between persons absent)
• Object of a contract of agency


  The execution of a juridical act in relation to third persons
• Exceptions where the principal cannot act through an agent

  • Personal acts, which the law or public policy requires to be performed personally
  • Criminal acts
  • Acts not allowed by law to be done by the principal
• Capacity of the principal


  If the principal is capacitated to act for himself, he can act through an agent. He must, therefore, be capacitated to give consent.
• Capacity of the agent

  The agent must be competent to bind himself, but only insofar as his obligations to his principal are concerned. Insofar as third persons are concerned, it is enough that his principal be the one capacitated.
• Communication of existence of agency

  • If a person specially informs another, the person appointed is considered an agent with respect to the person specially informed
  • If a person states by public advertisement, the person appointed is considered an agent with regard to any person
• Theory of imputed knowledge

  Notice to the agent constitutes notice to the principal. Knowledge of the agent is imputed to the principal.
• Kinds of agency according to manner of constitution


  • Express - orally or in writing
  • Implied - from the acts, silence or lack of action of the principal, or from the acts, silence or inaction of the agent
• Kinds of agency according to character

  • Gratuitous
  • Onerous/Compensated
• Kinds of agency according to business covered/authority conferred

  • General/Couched in general terms - one which comprises all the business of the principal
  • Special/Couched in specific terms - one which comprises one or more specific transactions
• Kinds of agency according to nature and effects

  • Ostensible or representative - agent acts in the name and representation of the principal
  • Simple or commission - agent acts in his own name but for the account of the principal
• Kinds of agency according to form

  • Oral
  • Written
• Differences between general agency and special agency

  • General agency involves all acts connected with the business or employment in which agent is engaged, while special agency only involves specific authorized acts or those necessarily implied
  • General agency involves continuous service, while special agency usually involves a single transaction
  • Acts within the scope of authority in general agency may bind principal even in conflict with special instructions, while acts beyond authority given in special agency cannot bind principal
  • Notice to third persons required to terminate apparent authority in general agency, while no notice required in special agency since third parties are required to inquire as to authority
  • Instructions are merely advisory in general agency, while the instructions, in so far as they grant authority, are strictly construed in special agency
• Implied agency


  The agent is a true agent, with rights and duties of an agent. The principal is always liable. The agent is never personally liable.
• Agency by estoppel


  If caused by agent, he is not a true agent; hence he has no rights as such. If caused by the principal, he is liable, but only if the third person acted on the misrepresentation. If caused by the agent, it is only the agent who is liable, never the alleged principal.
• 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. 1874]
• Presumption of agency for compensation

  Agency is presumed to be for a compensation, unless there is proof to the contrary. In the absence of stipulation, the agent is entitled to compensation only after he has completed or substantially completed his obligation.
• Misrepresentation


  When caused by the principal, he is liable, but only if the third person acted on the misrepresentation
• Agent's liability


  The agent is never personally liable
• Misrepresentation caused by the agent


  Only the agent who is liable, never the alleged principal
• 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
• Validity of oral appointment of agent

  Yes, the appointment of A as agent of P is valid because the Article 1874 only applies to a sale of piece of land
• Agency


  Presumed to be for a compensation, unless there is proof to the contrary
• Agent's compensation


  In the absence of stipulation, the agent is entitled to compensation only after he has completed or substantially completed his obligation
• Compensation


  Can be contingent/dependent upon the realization of profit for the principal
• Brokerage


  Refers to the trade or occupation of a broker
• Broker


  Engaged for others on a commission; negotiator between other parties, never acting in his name but in the name of those who employed him
• Universal Agent


  One employed to do all acts that the principal may personally do, and which he can lawfully delegate the power of doing