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RFBT 2 Presentation
RFBT 2 Presentation
Agency
A contract whereby a person binds himself to render some service or to do something in
representation or in behalf of another, with the consent and authority of the latter. (Art.
1868)
Characteristics of a contract of agency
1.Principal– does not need another contract for its existence
2.Preparatory—it is entered into by the parties in preparation for another contract
3.Consensual– is perfected by mere consent
4.Onerous– it it is bilateral, it is burdensome for both parties. However, if the contract is
unilateral, then it is gratuitous
5.Nominate—it has its own name
6.Bilateral—creates obligation for the agent to render service and the principal to
compensate him. If there is no compensation, then it is unilateral.
7.Commutative– both parties are obligated to each other except in unilateral contract of
agency
Who is an AGENT?
An agent is a person who binds himself to render some service or to do
something in representation or on behalf of another, with the consent or
authority of the later.
BASIS OF AGENCY
In a contract of agency, a person, the agent, binds himself to represent another,
the principal, with the latter’s consent or authority. Thus, agency is based on
representation, where the agent acts for and in behalf of the principal on
matters within the scope of the authority conferred upon him.
INTENT
(1) On the part of the principal, there must be an actual intention to appoint
or an intention naturally inferable from his words or actions; and
(2) On the part of the agent, there must be an intention to accept the
appointment and act on it
Even when the agent acts IN HIS OWN NAME, the principal is still bound in the
following instances:
1. When the contract involves things belonging to the principal (Art. 1883)
2. When the principal ratifies the contract, expressly or tacitly.
EFFECTS OF THE ACTS OF AN AGENT
When the agent acts:
1. With authority of the principal
a. If done in the NAME OF THE PRINCIPAL, the principal is bound to comply
with the obligations contracted (Art. 1910) and the agent is not personally
liable to the party with whom he contracted (Art. 1897)
b. If done in the NAME OF THE AGENT, the agent is directly bound in favor
of the person with whom he has contracted, except when the contract
involves things belonging to the principal.
2. Without authority or beyond the authority granted by the principal
a. if done in the NAME OF THE PRINCIPAL, it is UNENFORCEABLE. against
him, unless he ratifies it expressly or tacitly.
b. If done in the NAME OF THE AGENT, he is PERSONALLY LIABLE
OBLIGATIONS OF AGENT
1. Good faith and loyalty to his trust (fiduciary in nature, thus imposes
obligation of faithful service)– it includes exercise of reasonable care
2. Obligation to carry out agency
General rule: The agent is:
a. bound by his acceptance to carry out the agency
b. Liable for damages, which the principal may suffer, in case of non
-performance
c. Bound to finish the business already begun on the death of the principal
should delay entail danger
Exception: An agent shall not carry out an agency if its execution would
manifestly result in loss or damage to the principal (Art. 1888)
OBLIGATIONS OF AGENT
3. Obligation to advance necessary funds
General rule: The agent is not bound to advance the necessary funds. The
principal is obliged to advance to the agent, should the latter so request, the
sums necessary for the exercise of the agency.
Exception: He shall be bound to do so should there be a stipulation to that
effect, subject to the obligation of the principal to reimburse the agent.
Exception to the Exception: He is not bound to do so, even when there is a
stipulation, when the principal is insolvent. (Art. 1886)
OBLIGATIONS OF AGENT
4. Obligation to act in accordance with instructions
In the exercise of the agency:
a. The agent shall act in accordance with the instructions of the principal; or
b. In default thereof, he shall do all that a good father of a family would do,
as required by the nature of the business (Art . 1887)
5. Obligation to prefer interest of principal
General rule: The agent shall be liable for damages if, there being a conflict
between his interest and those of the principal, he should prefer his own. (Art.
1889)
Exception: The agent is not liable for giving preference to his own when:
1. The principal waives the benefit of this rule, with full knowledge of facts;or
2. When the interest of the agent is superior
OBLIGATIONS OF AGENT
6. Obligation for things received
Every agent is bound to:
1. Render an account of his transactions; and
2. Deliver to the principal whatever he may have received by virtue of the
agency, even though it may not be owing to the principal.
Note: Every stipulation exempting the agent to render an account shall be
void( Art. 1891)
OBLIGATIONS OF AGENT
7. The agent is responsible for the acts of the substitute:
a. when he was not given the power to appoint one;
b. When He was given such power, but:
b.1. Without designating the person; and
b.2. The person appointed was notoriously incompetent or insolvent.
Note: The agent may appoint a substitute if the principal has not prohibited him
from doing so.
OBLIGATIONS OF AGENT TO THIRD PERSONS
LIABILITY OF AGENT FOR OBLIGATIONS CONTRACTED
General rule: The agent who acts as such is not personally liable to the party
with whom he contracts. The principal is responsible for such acts done within
the scope of the authority granted to the agents, and should bear any damage
caused to third persons (Art. 1910)