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Law of Agency Short Notes 1
Law of Agency Short Notes 1
2012
Law of Agency
1.1 the need for an agency
• It is plainly discernable from the very first article of the Ethiopian civil code
that the human person is the subject of rights and duties from its birth to its
death. See art. 1 of cc
• In a similar fashion, artificial persons are also the subjects of rights and
duties from their formation (registration) to their liquidation (cancellation of
register). Art. 117-121
• Furthermore, per the dictations of the civil code, every person is presumed
capable unless expressly declared incapable by law. i.e., s/he is presumed to
have the necessary legal capacity to exercise the attribute features of his or
her legal personality or to personally take care of his or her interest. Read
Arts. 117 to 121 of the com. code. The immediate implication of registration
of a business organization is legal personality and cancellation of registration
is winding up of it. see arti. 119- Consult Art. 192 of the civil code of Ethiopia
• From this logic a question should emanate
that, so far as every person is capable of
personally exercising his or her own affairs in
everyday life (which is the most preferable),
why should there be a need for representation
or agency by another person (who is even
presumed to have his own personal
engagements)?
• The practical experience (legal or otherwise) in Ethiopia or elsewhere
reveals that the following are the major rationales that triggered the
need for representation by another person:
• It helps to overcome limitation (constraints) of time and place:
imagine that you are a prosperous business person running your
business throughout the country and it is also in the nature of the
businesses you are running that they require your immediate
attention or else the consequence will be unbearable. On the other
hand, nevertheless the modern commercial world is too complex,
you are just a human person that can only be at a place at a given
time or do a thing at a time. In such situations, the basic way out to
escape bankruptcy would be hiring an agent who act on your behalf
and help you to overcome such inherent limitation.
• It helps to overcome lack of business knowledge or
experience: it is an open secret that knowledge and
experience are not the only inputs to start a business.
However, with them added to the menu of a trader, the
business venture can get more attractive. In this regard,
hiring an agent (a professional) enables one to perform
certain tasks which s/he has neither the required
knowledge nor experience to perform by themselves.
Read Arts. 2234, 2251 for special agents called
commission and forwarding agents, respectively and Art.
44 of the com. Code for commercial agents.
• It is a tool to overcome the pitfalls of incapacity: as mentioned above, for
various reasons the law has precluded some groups of persons from
personally exercising their rights and duties. However, it is not fair that
they should remain remedy-less for they are at least possessors of rights
and duties as a person. Here emerges the necessity of agency that these
groups of persons can be capable of safely exercising their rights and duties
(take care of their interests) via means of representation by other capable
individuals.
• According to Articles 192-194 of the civil code there are two types of such
disabilities: General disabilities (which depend on the age or mental
condition of persons or on sentences passed upon them) and Special
Disabilities (which depends on reasons of their nationality or functions
exercised by them).
• Refer to Arts. 204-209, 263, and 359 of the civil code
• The very nature of artificial persons: it is a clear fact that such persons
are endowed with legal personality artificially (as opposed to naturally)
for the sake of convenience in control and other rationalities. Otherwise,
they are non-living things (associations of capital) that lack the necessary
mental capability to analyze the cost and benefit of their transaction.
Hence, it is inherent in their very nature that they need to be
represented by physical persons who will act on their behalf and deal
with third parties. For instance, the founders, managers, directors, and
secretaries, of all business organizations are natural persons who are
authorized to act on their behalf.
• Read Art. 216 of the com. Code. It states that a business organization
shall acquire rights and incur liabilities by its agents in accordance with
the provisions relating to agency. Read also Arts 35-36 of the same.
1.2 Sources of Agency