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Chapter 4 Modes of Extinguishment of Agency Art. 1919 Agency is extinguished: 1. By its revocation 2. By the withdrawal of the agent; 3.

By the death, civil interdiction, insanity or insolvency of the principal or of the agent; 4. By the dissolution of the firm or corporation which entrusted or accepted the agency; 5. By the accomplishment of the object or purpose of the agency; 6. By the expiration of the period for which the agency was constituted. Modes of extinguishing agency: 1. By the subsequent acts of the parties -revocation -withdrawal of the agent a. by the act of both parties or by mutual consent b. by the unilateral act of one of them. 2. By operation of Law -by the death, civil interdiction, insanity or insolvency of the principal or of the agent -dissolution of the firm which accepted the agency 3. By agreement - accomplishment of the object or purpose of the agency - expiration of the period Modes provided not exclusive An agency may also be extinguished by the modes of extinguishment of obligations in general when applicable like loss of the thing and novation, change in law affecting the subject matter or transaction involved in the execution of the agency, especially if it makes the required act illegal and change in conditions not anticipated by the parties like the outbreak of war, preventing or making impossible the accomplishment of the purpose of the agency. 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. Agency generally revocable at will by principal. An agency may be terminated by the subsequent acts of the parties. When done by the principal – revocation When done by the agent – renunciation Since the authority of the agent emanates from the principal, it is enough that the principal should wish to terminate the agency. More over, confidence being the cardinal basis of the relation, it stands to reason that it should cease when such confidence disappears. Revocation at will is proper whether the agency is gratuitous or with compensation, as the law makes no distinction. Liability of principal for damage caused by revocation While the principal may have absolute power to revoke the agency at any time, he must respond in damages in those cases wherein not having the right to do so, he should discharge the agent. His power to revoke must be distinguished from his right to revoke. Thus, the principal is liable in damages occasioned by the wrongful discharge of the agent before the expiration of the period fixed.

2. however. 1922. they have a right to presume that the representation continues to exist in the absence of notification by the principal. 1923. its revocation will not prejudice such third person until notice thereof is given them. revocation of the agency does not prejudice third persons who acted in bad faith and without the knowledge of the revocation. Effect of Revocation in relation to third persons 1. Art. Of course.In such case. Express 2.) – for the publication constitutes notice upon everybody and this is true whether or not such third persons have read the newspaper concerned.If the agency is created for the purpose of contracting with specific persons. If the purchase is pushed through. . P revoked the authority of A but did not give notice of the revocation to B. its revocation shall not prejudice the latter if they were not given notice thereof. – The principal appoints a new agent for the same business or transaction Art. Art. (Art. innocent third persons dealing with the agent will not be prejudiced by the revocation before they had knowledge thereof. If the agent had general powers. If the agency has been entrusted for the purpose of contracting with specified persons. P is still liable for the price assuming B acted in good faith and without knowledge of the revocation. (Art. 1924 – When the principal directly manages the business entrusted to the agent. Art.the purpose is to prevent the agent from making use of the power of attorney and thus avoid liability to third persons who may subsequently deal with the agent on the faith of the instrument. Agency to contract with the general public. Pending negotiations. without prejudice to the provisions of the two preceding articles. Agency to contract with specific persons. the fact that the revocation was advertised in a newspaper of general circulation would be sufficient warning to third persons. 1920) . 1921. In this case. (Art. Implied Implied: Art. . 1922. If the authority of the agent is in writing. 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 agency. notice is not required if the third persons already know of the revocation. 1923. 1921) Reason – Since the third persons have been made to believe by the principal that the agent is authorized to deal with them.In case the agent has general powers (as when the agent has been appointed to manage a business). the action of indemnity would be derived not from the law but from the contract of the parties. Revocation by appointment of new agent . the principal can compel the agent to return the document evidencing the agency. Kinds of Revocation 1. however. Example: P authorized A to especially transact the purchase of a parcel of land belonging to B who was given notice of the authorization given to A. Notice of the revocation in a newspaper of general circulation is a sufficient warning to third persons.

P authorized A to manage the former’s printing press. P demanded payment from X telling the latter to remit him (P) the amount the collection of which he entrusted to A. The agency to A is revoked. There is no implied revocation of the previous agency.) Consequently. Revocation by direct management of business by principal himself. .There is implied revocation of the previous agency when the principal appoints a new agent for the same business or transaction. Art. 1922. (Arts. 1921. P also gave authority to B to sell the same land. But if B was given an exclusive authority to sell. (Implied revocation) The effect of the direct management of the business by the principal himself is to revoke the agency for there would no longer be any basis for the representation previously conferred. 1924 The agency is revoked if the principal directly manages the business entrusted to the agent. Example: 1. Subsequently. Art. dealing directly with third persons. Revocation by one of two or more principals The appointment of an agent by two or more principals for a common transaction or undertaking makes them solidarily liable to the agent for all the consequences of the agency. any one of them may revoke the same without the consent of the others. Every now and then. 1925. Subsequently. there is an implied revocation of the previous agency. The intention of P may be to authorize both A and B for the same transaction. 2. The rights of third persons who acted in good faith and without knowledge of the revocation will not be prejudiced. P authorized A to collect whatever amounts may be due P from X. (Art. When two or more principals have granted a power of attorney for a common transaction.) Example: P authorized A to sell the former’s land. unless the only desire of the principal is for him and the agent to manage the business together. one of the principals is granted under this article the right to revoke the power of attorney without the consent of the others. 1915. There is no implied revocation where the only purpose of P is to help A in the management of the business. P takes direct part in the management of the business.