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Chapter 1. Nature, Form and Kinds ofAgencyArt. 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: A relationship which implies a power in an agent to contract ...

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Finals Reviewer

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Essential Elements of Agency: 1.) Consent, express or implied; 2.) Object of the contract is the execution of a juridical act in relation to 3rd persons; 3.) The agent acts as a representative and not for himself; 4.) The agent acts within the scope of his authority.

Chapter 1. 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.

Acts that cannot be done through an agent: 1.) Personal acts: if personal performance is reqd by law or public policy or agreement; 2.) Criminal or illegal acts: attempt to delegate another authority to do an act which, if done by the principal would be illegal, is void.

Agency: A relationship which implies a power in an agent to contract with a 3rd person on behalf of a principal.

Nature of Relation between Principal and Agent: Fiduciary, based on trust and confidence.

Kind of Contract: It is a preparatory contract. It is a contract entered not for its own end but to be able to enter into other contracts.

Agency v. Lease of Work or Service Agency Lease of Work/Service Basis is representation. Basis is employment Agent exercises Lessor only performs discretionary powers. ministerial functions. 3 persons are involved: Only 2 persons involved: principal, agent & 3rd lessor and lessee person. Matters of mere manual or Commercial or business mechanical execution. transactions.

Characteristics: 1.) Consensual: perfected by mere consent; 2.) Nominate: it has its own name; 3.) Principal: does not depend on another contract for its existence and validity; 4.) Preparatory: entered into as a means to an end; 5.) Unilateral/Bilateral: a.) Unilateral: if contract is gratuitous, it creates obligations for only one of the parties, i.e. agent. b.) Bilateral: if for compensation, it gives rise to reciprocal rights and obligs.

Agency v. Guardianship Agency Agent represents a capacitated person. Agent appointed by principal and can be removed by him. Agent subject to directions of principal.

Basis: Representation. The acts of the agent on behalf of the principal within the scope of his authority produce the same legal and binding effects as if the principal personally did them. Distinguishing Features: 1.) Representative character; and 2.) Derivative authority.

Agent can make principal personally liable.

Purpose: To extend the personality of the principal through the facility of the agent. Agency to Sell v. Sale Agency to sell Agent receives the goods as the goods of the principal. Agent delivers proceeds of the sale. Agent can return object in case he is unable to sell to a 3rd person. Agent in dealing with the thing received is bound to act accdg to the instructions of his principal

Parties: 1.) Principal; and 2.) Agent. Who can be principal? The principal may be a natural person or a juridical person. He must be capacitated. The rule is if a person is capacitated to act for himself or in his own right, he can act through an agent. Must the agent have capacity? Insofar as 3rd persons are concerned, it is enough that the principal is capacitated; but insofar as his obligations to his principal are concerned, the agent must be able to bind himself.

Helen C. Arevalo

2nd Sem; 2003

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Guardianship Guardian represents an incapacitated person. Guardian appointed by court and stands in loco parentis. Guardian not subject to directions of ward but must act for his benefit. Guardian has no power to impose personal liability on his ward.

Sale Buyer receives the goods as owner. Buyer pays the price. Generally, buyer cannot return the object sold. Buyer can deal with the thing as he pleases, being the owner.

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Art. 1870. 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.

Agent v. Independent Contractor Agent Independent Contractor Represents the principal. Employed by employer. Acts under the control and Acts according to his own instructions of the principal method. Principal liable for torts Employer not liable for committed by agent w/in torts committed by scope of authority. independent contractor.

Form of Acceptance by Agent: Acceptance may be express or implied; express when it is oral or written; implied when it can be inferred from the acts of the agent which carry out the agency, or from his silence or inaction accdg to the circumstances.

Art. 1869. Agency must be express, or 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. Agency may be oral, unless the law requires a specific form.

Art. 1871. 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. Between 2 persons who are present, when it acceptance deemed implied? When the agent receives a power of atty from the principal himself personally without objection.

Classifications of Agency: as to… 1.) Manner of Creation: a.) Express: actually authorized, either orally or in writing. b.) Implied: implied from acts of principal, from his silence or lack of action or his failure to repudiate the agency knowing that another person is acting on his behalf w/o authority. 2.) Character: a.) Gratuitous: agent receives no compensation for his services. b.) Onerous: agent does receive compensation. 3.) Extent of business covered: a.) General: comprises all the business of the principal. b.) Special: comprises one or more specific transactions. 4.) Authority conferred: a.) Couched in general terms: deemed to comprise only acts of administration. b.) Couched in specific terms: authorizes only the performance of a specific act/s. 5.) Nature and effects: a.) Representative: agent acts in name and representation of principal. b.) Simple/Commission: agent acts in his own name but for the account of the principal.

Is this presumption conclusive? NO, it can be rebutted by contrary proof. Power of attorney: 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. Its primary purpose is to evidence the authority of the agent to 3rd parties w/ whom the agent deals. Construction A power of atty is strictly construed and strictly pursued. The instrument will be held to grant only those powers which are specified, and the agent may neither go beyond nor deviate from the power of atty. The only exception is when strict construction will destroy the very purpose of the power. Meaning of “present” Not limited to face-to-face encounters. 2 persons conversing on the phone are also considered as both “present”. Art. 1872. Between persons who are absent, the acceptance of the agency cannot be implied from the silence of the agent, except: 1.) When the principal transmits his power of attorney to the agent, who receives it without any objection; 2.) 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.

Can agency be presumed? Generally NO because the relationship between the principal and agent must exist as a fact. The only exceptions to this rule are when agency arises by operation of law or agency is presumed to prevent unjust enrichment. Form: Generally, NO formal requirements. Agent’s authority may be oral or written, it may be in public or private writings. The only exception is when the law requires a specific form (e.g. sale of real property or any interest therein by an agent.)

Helen C. Arevalo

2nd Sem; 2003

2 Ways of Giving Notice of Agency 1.) By special information; or 2.) By public advertisement.

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its agents. But it may be estopped through affirmative acts of its officers acting within the scope of their authority.

Effects: 1.) Special information: the person appointed as agent is considered such with respect to the person to whom it was given. 2.) Public advertisement: Agent is considered such with regard to any person.

Art. 1874. 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.

Revocation – An agency is revoked in the same manner as it was given. General rule: Special information needs special information of revocation. Except: if you can prove that the 3rd person read the notice in the newspaper.

 A letter is sufficient [Jimenez v. Rabot]. Art. 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary.

Art. 1873. 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.

Broker: One who in behalf of others, and for compensation or fee, negotiate contracts relative to property. He is the negotiator between the parties, never acting in his own name, but in the name of those who employ him. He is strictly a middleman and for some purposes, the agent of both parties. When is a broker entitled to compensation? A broker is entitled to commission whenever he rings to his principal a party who is able and willing to take the property, and enter into a valid contract upon the terms named by the principal, although the particulars may be arranged and the matter negotiated and completed between the principal and the purchaser directly. A broker is never entitled to commission for unsuccessful efforts.

Agency by Estoppel: There is really no agency at all, but the alleged agent seemed to have apparent or ostensible, although no real authority to represent another. 1.) Estoppel of Agent – One professing to act as agent for another may be estopped to deny his agency both as against his asserted principal and the 3rd persons interested in the transaction in which he is engaged. 2.) Estoppel of Principal – a.) As to Agent – One who knows that another is acting as his agent and fails to repudiate his acts, or accept the benefits of them, will be estopped to deny the agency as against such other. b.) As to sub-agent – To estop the principal from denying his liability to a 3rd person, he must have known or be charged with knowledge of the fact of the transmission and the terms of the agreement between the agent and subagent. c.) As to 3rd persons – One who knows that another is acting as his agent or permitted another to appear as his agent, to the injury of 3rd persons who have dealt with the apparent agent as such in good faith and in the exercise of reasonable prudence, is estopped to deny the agency. 3.) Estoppel of 3rd Persons – A 3rd person, having dealt with one as an agent may be estopped to deny the agency as against the principal, agent or 3rd persons in interest. 4.) Estoppel of the govt – The govt is neither estopped by the mistake or error on the part of Helen C. Arevalo

2nd Sem; 2003

Does the law allow double agency? Such agency is disapproved by law for being against public policy and sound morality. The exception is where the agent acted with full knowledge and free consent of the principals. In case the agent assumes a double agency, what is his right to compensation? 1.) If with knowledge of both principals – recovery can be had from both. 2.) If without knowledge of both – agent can recover from neither. 3.) If with knowledge of only one – as to the principal who knew of that fact and as to the agent, they are in pari delicto and the courts shall leave them as they were, the contract between them being void as against public polisy and good morals. Art. 1876. An agency is either general or special. The former comprises all the business of the principal. The latter, one or more specific transactions. Classification of Agents: 1.) Universal agent: One employed to do all acts that the principal may personally do, and which

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the principal can lawfully delegate to another the power of doing. 2.) 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. 3.) Special/Particular agent: One authorized to act in one or more specific transactions, or to do one or more specific acts, or to act upon a particular occasion. e.g.: a.) Atty at law: One whose business is to represent clients in legal proceedings. b.) Auctioneer: One whose business is to sell property for others to the highest bidder at a public sale. c.) Broker: One whose business is to act as intermediary between 2 other parties. d.) Factor: One whose business is to receive and sell goods for a commission, being entrusted with the possession of the goods involved in the transaction.

Art. 1877. 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 execute such acts as he may consider appropriate, or even though the agency should authorize a general or unlimited management. Examples of acts of mere administration: 1.) To sue for collection of debts; 2.) To employ workers or servants and employees needed for the conduct of business; 3.) To engage counsel to preserve the ownership and possession of the principal’s property; 4.) To lease real property to another person for 1 year or less, provided the lease is not registered; 5.) To make customary gifts for charity or to employees in the business managed by the agent 6.) To borrow money if it be urgent and indispensable for the preservation of the things under administration.

Attorney-in-fact: One who is given authority by his principal to do a particular act not of a legal character. In strict legal sense: An agent having a special authority created by deed.

How are contracts of agency construed? Contracts of agency as well as general powers of attorney must be interpreted in accordance with the language used by the parties. The real intention of the parties is primarily determined from the language used and gathered from the whole instrument. In case of doubt, resort must be had to the situation, surroundings and relations of the parties. The intention of the parties must be sustained rather than defeated. So if the contract be open to 2 constructions, one of which would uphold the intention while the other would overthrow it, the former is to be chosen.

General Agent v. Special Agent [SNETI] As to… General agent Special agent Scope of All acts connected Only one or more authority w/ the business in specific acts in which he is pursuance of engaged. particular instructions or w/ restrictions necessarily implied from the act to be done. Series a Nature of Single transaction transactions service or a series of involving a authorized transactions not continuity of involving continuity service. of service. Cannot in a manner By an act within Extent to beyond or outside which agent the scope of his the specific acts w/c authority although may bind he is authorized to it may be contrary principal perform. to his special instructions. Termination Apparent authority Termination of authority does not terminate effective as to 3rd by mere revocation party unless agency was for purpose of of authority w/o contracting w/ that notice to 3rd parties. 3rd party. Strictly construed. Construction Merely advisory. Limits the authority of of agent. instructions of principal

Helen C. Arevalo

2nd Sem; 2003

MEMORIZE THIS: [PNC-WIGLLS-PG-CARS] Art. 1878. Special powers of attorney are necessary in the following cases: 1.) To make such payments as are not usually considered as acts of administration; 2.) To effect novations which put an end to obligations already in existence at the time the agency was constituted; 3.) 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; 4.) To waive any obligation gratuitously; 5.) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration; 6.) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent;

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8.) 9.) 10.) 11.) 12.) 13.) 14.) 15.)

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5.) Fix the terms of the sale unless there be set conditions stipulated by the principal; 6.) Sell only for cash; 7.) Receive the price unless he was authorized only to solicit orders.

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.

The ff are not included in a Power to Mortgage The power to: 1.) Sell; 2.) Execute a 2nd mortgage; 3.) Mortgage for the agent’s personal benefit or for the benefit of any 3rd person, unless the contrary has been clearly indicated. Does the principal have the power to revoke a contract giving an agent exclusive authority to sell? YES. But he may not have the right to use such power if he has agreed not to exercise such power during a certain period. In case he fails to comply with this obligation-not-to-do, he will be liable for damages.

Scope of General Authority to Purchase Where an agent’s power to purchase is general and unrestricted, he has implied authority to do whatever is usual and necessary in the exercise of such power. He may: 1.) Determine the usual and necessary details of the contract, 2.) agree upon the price, 3.) modify or rescind the contract of purchase, 4.) accept delivery for his principal, 5.) give directions for the delivery of the property purchased, and 6.) may borrow money to pay for the care and preservation of the property purchased. But he has no special power to 1.) Settle a contest between the principal and a 3rd person regarding the ownership of goods purchased, or 2.) Agree to an account stated, or 3.) Do anything not usual or necessary to the exercise of such authority.

Art. 1880. A special power to compromise does not authorize submission to arbitration. Rationale: A principal may authorize his agent to compromise because of absolute confidence in the latter’s judgment and discretion to protect the former’s rights and obtain for him the best bargain in the transaction. If the transaction would be left in the hands of an arbitrator, said arbitrator may not enjoy the trust of the princ...