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NATURE, FORMS AND KINDS OF AGENCY The power shall continue to be in full force and

effect until notice rescinding it in the similar

Art 1868 – By the contract of agency, a person manner in which it was given.
binds himself to render some service, or to do
something in representation or on behalf of Art 1874 – When a sale of a piece of land or any
another with the consent of the latter. interest therein, is through an agent, the
authority shall be in writing, otherwise, the sale
Art 1869 – An agency may express or implied, shall be void.
from the acts of the principal, or his silence or his
inaction, or his failure to repudiate the agency Art 1875 – Agency is presumed to be for
knowing that there is a person acting on his compensation, unless there is proof to the
behalf without authority. contrary.

Agency may also be oral, unless a law requires it Art 1876 – Agency may either be general or
to be in a specific form. special. The former consists all the businesses of
the principal. The latter, two or more specific
Art 1870 – Acceptance of the agent may also be transactions.
express or implied, from his acts carrying out the
agency, or his silence or inaction according to the Art 1877 - Agency couched in general terms
circumstances. comprises only acts of administration even if the
principal should state that no power be
Art 1871- Between persons who are present, withhold, or the agent is authorize to execute
acceptance of the agency may also be implied acts which he considered appropriate or even
when the principal delivers his power of attorney though the agency authorize a general and
to the agent, and the latter accepts it without unlimited management.
any objection.
Art 1878 – Special power of attorney is required
Art 1872 – Between persons who are absent, in the following cases:
acceptance of the agency cannot be implied
from the silence of the agent, except: 1. To make such payments as are not
usually considered as acts of
When the principal transmits his power of administration.
attorney to the agent, and the latter receives it 2. To effect novation to put an end to an
without any objection. obligation already in existence when the
When the principal entrusts by letter or telegram agency was constituted.
his power of attorney relating to a business 3. To compromise, to submit question to
which he is habitually engaged as agent, and the arbitration, to renounce right to appeal
latter did not reply to the letter or telegram. from a judgment, to waive objection to
the venue of an action, or to abandon a
Art 1873 – If a person specially informs another prescription already acquired.
or states by public advertisement that he has 4. To waive any obligation gratuitously.
given his power of attorney, he is deemed to be 5. To enter into any contract where
his authorize agent, in the former case, to the ownership of an immovable is
person who receives the special information, transmitted or acquired either
and the latter, with regard to any person. gratuitously or for a valuable
6. To make gifts except those customary transaction was his own, except when the
ones for charity or made to the contract involves things belonging to the
employees in the business managed by principal.
the agent;
The provisions of this article shall be understood
7. To loan or borrow money unless the
to be without prejudice to the actions between
acts be urgent and indispensable in the
the principal and agent.
preservation of things under his
8. To lease a real property to another
person, for more than one year;
9. To bind the principal to render some
service without compensation;
10. To bind the principal to contract of
11. To obligate the principal, as guarantor
or surety;
12. To create or convey real rights over an
immovable property;
13. To accept or repudiate an inheritance;
14. To ratify or recognize an obligation
contracted before the agency;
15. Any acts of strict dominion.

Art 1879 – The special power to sell excludes the

power to mortgage, the special power to
mortgage does not include the power to sell.

Art 1880 – The special power to compromise

does not authorize submission to arbitration.

Art 1881 – The agent must act within the scope

of his authority. He may do such act as may be
conducive to the accomplishment of the
purpose of the agency.

Art 1882 – The limits of agent’s authority shall

not be considered exceeded should it have been
performed in the manner more advantageous to
the principal than that specified by him.

Art 1883 – If the agent acts in his own name, the

principal has no right of action against the
person whom he had contracted, neither such
persons against the principal.

In such case, the agent is the one directly bound

to the person whom he had contracted, as if the
OBLIGATIONS OF THE AGENT authorized to lend money at interest, he cannot
borrow it without the consent of the principal.
Art 1884 – The agent is bound by his acceptance
to carry out the agency and is liable for damages Art 1891- The agent shall be bound to render an
which, through his non-performance, the account of his dealings and deliver whatever he
principal may suffer. had received by virtue of the agency, even
though it may not be owing to the principal.
He must also finish the business already begun
on the death of the principal, should delay entail Every stipulation exempting the agent from the
any danger. obligation to render an account shall be void.

Art 1885 – In case a person declines the agency, Art 1892 - The agent may appoint a substitute,
he is bound to observe the diligence of a good if the principal has not prohibited him from
father of a family in the custody and doing so; but he shall be responsible for the acts
preservation of the goods forwarded to him by of the substitute:
the owner until the latter should have appoint an
1. When he was not given the power to
agent. The owner as soon as practicable either
appoint one;
appoint an agent or take charge of the goods.
2. When he was given such power, but
Art 1886 – Should there be stipulation to without designating the person, and the
advance the necessary funds, he shall be bound person appointed is notoriously
to do such, except when the principal is incompetent or insolvent.
Art 1893 – In the cases mentioned in numbers 1
Art 1887 – In the execution of agency, the agent and 2 of the preceding article, the principal may
must act in accordance with the instruction of furthermore bring an action against the
the principal. substitute in relation to obligations which the
latter has contracted under the substitution.
In default thereof, he shall do what a good
father of a family would do, as required by the Art 1894 – The responsibility of two or more
nature of the business. persons, even though they have been appointed
simultaneously, is not solidary, if solidarity has
Art 1173 – The fault or negligence of the obligor not been expressly stipulated.
consists of his omission to observe the diligence
required by the nature of the obligation and the Art 1895 – If solidarity has been agreed upon,
corresponding circumstances of a person, of the each of the agents is responsible to the non-
time, of the place. fulfilment of the agency and for the fault or
negligence of his fellow agents, except in the
Art 1888 – The agent shall not carry out the latter if the fellow agents acted beyond the
agency if it would manifestly result in scope of their authority.
loss/damage to the principal.
Art 1896 – The agent owes interest on the sums
Art 1889 – The agent shall be liable for damages, he has applied for his own use from the day on
if there being conflict between his interest, and which he did so, and on those which he owes
those of the principal, he should prefer his own. after the extinguishment of the agency.
Art 1890 – If the agent has been empowered to Art 1897 – The agent who acts as such is not
borrow money, he may himself be the lender at personally liable to the party with whom he
current rate of interest, if he has been
contracts, UNLESS he expressly binds himself or COMMISSION AGENT
exceeds the limits of his authority without giving
such party sufficient notice of his powers. Art 1903 – The commission agent shall be
responsible for the goods received by him in
Art 1898 – If the agent contracts in the name of terms and conditions as described in the
the principal, exceeding the scope of his consignment; unless upon receiving them he
authority, and the principal does not ratify the should make a written statement of the damage
contract, IT SHALL BE VOID IF THE PARTY WITH and deterioration suffered by the same.
THE LIMITS OF THE POWERS GRANTED BY THE Art 1904 – The commission agent who handles
PRINCIPAL. In this case, the agent is liable if he goods of the same kind and mark, which belong
undertook to secure the principal’s ratification. to different owners, shall distinguish them by
countermarks, and designate the merchandise
Art 1899 – If a duly authorized agent acts in respectively belonging to the principal.
accordance with the orders of the principal, the
latter cannot set up the ignorance of the agent Art 1905 – The commission agent cannot,
as to circumstances whereof he himself was or without the express or implied consent of the
ought to have been aware. principal sell on credit. Should he do so, the
principal may demand payment on cash, but the
AS TO THIRD PERSONS commission agent shall be entitled to any
interest or benefit which may result from such
Art 1900 – So far as the third person are
concerned, an act is deemed to have been
performed within the scope of the agent’s Art 1906 – Should the commission agent, with
authority, if such acts is within its terms of the the authority of the principal, sell on credit, he
power of attorney, as written, even if the agent shall so inform the principal, with a statement
has in fact exceeded the limits of the authority of the names of the buyer. Should he fail to do
accdg to an understanding between the principal so, the sale shall be deemed to have been made
and the agent. for cash insofar as the principal is concerned.

Art 1901 – A third person cannot set up the fact Art 1907 – Should the commission agent receive
that the agent has exceeded his powers, if the on a sale, in addition to the ordinary commission,
principal has ratified, or has signified his another called guarantee commission, he shall
willingness to ratify the agent’s acts. bear the risk of collection and shall pay the
principal the proceeds of the sale on the same
Art 1902 – A third person with whom the agent
terms agreed upon with the purchaser.
wishes to contract on behalf of the principal may
require the presentation of the power of Art 1908 – The commission agent who does not
attorney or the instructions as regards the collect the credits of the principal at the time
agency. Private or secret orders and instructions when they become due and demandable shall be
of the principal do not prejudice third persons liable for damages, unless he proves that he
who have relied upon the power of attorney or exercised due diligence for that purpose.
instructions show them.
Art 1909- The agent is responsible not only for
fraud but also for the negligence, which shall be
judged with more or less rigor by the courts
according to whether the agency was or was not Art 1916 – When two or more persons contract
for compensation. with regard to the same thing, one of them to
the principal and the other to the agent, and the
contracts are so incompatible with each other,
OBLIGATIONS OF THE PRINCIPAL that of prior date shall be preferred.

Art 1910 – The principal must comply with all Art 1917 – In the case referred in the preceding
the obligations which the agent has contracted article, if the agent has acted in good faith, the
within the scope of his authority. principal shall be liable for damages to third
person whose contract has been rejected. But if
As for any obligation wherein the agent has the agent acted in bad faith, he alone shall be
exceeded his authority, the principal is not responsible.
bound EXCEPT when he ratifies it expressly or
tacitly. Art 1918 – The principal shall not be liable for
the expenses incurred by the agent in the
Art 1911 – Even when the agent has exceeded following cases:
his authority, the principal is solidary liable with
the agent if the principal allowed the latter to 1. When the agent acted in contravention
act as though he had full powers (ESTOPPED) of the principal’s instructions UNLESS
Art 1912 – The principal must advance to the THE BENEFITS DERIVED FROM THE
agent, should the latter so request, the sums CONTRACT
necessary for the execution of the agency. 2. When the expenses were incurred due
to fault or negligence of the agent.
Should the agent advanced them, the principal
3. When the agent incurred the expenses
must reimburse him therefor, even if the
with the knowledge that an unfavorable
business or undertaking be unsuccessful,
result would ensue, if the principal was
provided the agent is free from all fault.
not aware thereof.
The reimbursement shall include interest on the 4. When it was stipulated that the
sums advanced from the day it has been made. expenses would be borne by the agent,
or that the latter would be allowed only
Art 1913 – The principal must also indemnify the
a certain sum.
agent for all the damages which the executive of
the agency may have caused the agent, without
fault or negligence on his part.

Art 1914 – The agent may retain in pledge the

things which are the object of the agency until
the principal effects the reimbursement and
pays the indemnity.

Art 1915 – If two or more persons have

appointed an agent for a common transaction or
undertaking, they shall be solidary liable to the
agent for all the consequences of the agency.
MODE OF EXTINGUISHMENT OF AGENCY Art 1925 – When 2 or more principals have
granted a power of attorney for a common
Art 1919 – Agency is extinguished: transaction, any one of them may revoke the
1. By its revocation agency without the consent of the others.
2. Withdrawal of the agent Art 1926 – A general power of attorney is
3. By death, civil interdiction, insanity or revoked by special one granted to another agent.
insolvency of the principal or agent
4. By dissolution of the firm or Art 1927 – An agency cannot be revoked when:
corporation which entrusted or
1. A bilateral contract depends upon it
accepted the agency.
2. If it is a means for fulfilling an obligation
5. By accomplishment of the object or
already contracted
purpose of the agency
3. If a partner is appointed manager of the
6. By expiration of the period where the
partnership for contract of partnership
agency was constituted
and his removal from the management
Art 1920 – The principal may revoke the agency is unjustifiable.
at will and compel the agent to return the
Art 1928 – The agent may withdraw from the
document evidencing the agency. Revocation
agency by giving notice to the principal. If the
may be express or implied.
principal should suffer any damage by reason of
AS TO THIRD PERSONS the withdrawal, the agent must indemnify him
Art 1921 – If the agency has been entrusted for WITHDRAWAL UPON IMPOSSIBILITY OF
the purpose of contracting with specified CONTINUING THE PERFORMANCE OF THE
persons, the revocation shall be without AGENCY WITHOUT GRAVE DETRIMENT ON TO
prejudice to the latter if they were not given HIMSELF.
notice thereof.
Art 1929 – The agent, even if he should withdraw
Art 1922 – If the agent had general powers, from the agency for a valid reason, must
revocation of the agency does not prejudice continue to act until the principal has had
third persons who acted in good faith and reasonable opportunity to take necessary steps
without knowledge of the revocation. Notice to to meet the situation.
the newspaper of general circulation is
sufficient warning to third persons. Art 1930 – The agency shall remain in full force
and effect even after the death of the principal
Art 1923 – The appointment of a new agent for 1. If it has been constituted for the
the same business or transaction revokes the common interest of the principal and
previous agency from the day notice thereof was agent
given to the former agent. 2. Interest of third person who has
accepted the stipulation in his favor
Art 1924 – The agency is revoked when the
principal directly manages the business Art 1931 – Anything done by the agent, without
entrusted to the agent, directly dealing with the the knowledge of the death of the principal or
third persons. any modes of extinguishment of agency shall be
valid and shall be fully effective with respect to
third persons who may have contracted with him
in good faith.

Art 1932 – If the agent dies, his heirs must inform

the principal and in the meantime adopt such
measures as the circumstances may demand in
the interest of the principal.