Agency:

A relationship which implies a power in an agent to

contract with a 3rd person on behalf of a principal.
The basis is representation not form of service or
employment.
Phrase “for or in our behalf” does not necessarily
establish an agency. What is decisive is the intention of
the parties.
 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.

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.

 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 obligations.

6.) Generally Onerous (Art. 1875)

7.) Fiduciary : as it is based on trust and confidence

8.) Representative Relation: not a personal one in relation to third person

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.

Purpose:

To extend the personality of the principal through the

facility of the agent (constructive representation)
Parties:

1.) Principal – the party represented

2.) Agent – the party who represents the principal

3.) Sub-agent – agent of the agent; the contract of agency may prohibit
the agent from appointing a sub-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.

Acts that cannot be done through an agent:

1.) Personal acts: if personal performance is required 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 v. Lease of Work or Service

Agency Lease of Work/Service

Basis is representation. Basis is employment

Agent exercises discretionary Lessor only performs ministerial

powers. functions.

3 persons are involved: Only 2 persons involved: lessor

principal, agent & 3rd person. and lessee

Commercial or business Matters of mere manual or

transactions. mechanical execution.
 Agency v. Guardianship

Agency Guardianship

Agent represents a capacitated Guardian represents an

person. incapacitated person.

Agent appointed by principal Agent appointed by principal

and can be removed by him. and can be removed by him.

Agent subject to directions of Guardian not subject to

principal.
Agent can make principal
personally liable.
directions of ward but must act
for his benefit.
Guardian has no power to
impose personal liability on his
ward.
 Agency to Sell v. Sale

Agency to sell Sale

Agent receives the goods as Buyer receives the goods as

the goods of the principal. owner.

Agent delivers proceeds of the Buyer pays the price.

sale.

Agent can return object in case Generally, buyer cannot return

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
the object sold.
Buyer can deal with the thing
as he pleases, being the
owner.
 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 torts

committed by agent w/in scope committed by independent
of authority. contractor.
 Agency v. Partnership

Agent Partner

Acts for the principal nor for Acts for himself, the firm and
himself co-partners.
Partnership is a branch on the
law on agency

Agency v. Negotiorium Gestio

There is meeting of the minds No meeting of the minds

Agent is under the control of Acts according to his own

the principal sound discretion
Created by agreement Created by law
 Agency v. Trust

Arises from contract May be generated by contract

or not, or by law

Agent holds no title over the Trustee may hold title over the
property property

May be revoked anytime Terminated upon the

accomplishment of the purpose
to which it was formed or
established
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.
Classifications of Agency:
as to…

1.) Manner of Creation:

a) Express: actually authorized, either (i.) orally or in

( ii.)writing.

b.) Implied: implied from (i.) acts of principal,(ii.) from his

silence or lack of action or (iii.) his failure to repudiate
the agency knowing that another person is acting on his
behalf w/o authority. The enumeration is not exclusive,
there may be other situation of implied agency
2.) Character or Consideration:

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 or Management

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.
 c. ) Conventional: created by agreement of the parties

d.) Legal: formed by operation of law (Art. 1803, 1884

par 2,1885, 1929 and 1932)

6.) As to manner of Appointment

a.) Direct: the principal appointed the agent

directly

b.) Indirect: appointment is through another

person (Art. 381)
 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.)
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.

Acceptance:
A person has a right to represent or reject his appointment as an
agent. It is only in legal agency where he cannot refuse the
creation of the agency because the law dictates.

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 according
to the circumstances.
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 attorney from the principal

himself personally without objection.

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 attorney 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.
Except as may be required by statute, a power of attorney is valid
although no notary public intervened in its execution (Lim Pin v. Liao
Tan, 115 SCRA 296)

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.
 Distinction between Article 1871 and 1872

Basis 1871 1872

Condition of Both the principal and agent Both the principal and
creation are present the agent are absent

Manner of The Power of attorney is The Power of

delivery personally delivered by the
principal to the agent
Attorney is not
personally delivered.
There is transmission
by messenger, letter
or telephone
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.
2 Ways of Giving Notice of Agency

1.) By special information; or

2.) By public advertisement.

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.
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.

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 sub-agent.
 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.

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.

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 government – The government is
neither estopped by the mistake or error on the part of its
agents. But it may be estopped through affirmative acts of
its officers acting within the scope of their authority.

Distinction between Implied agency and Agency by

estoppel
Implied Agency Agency by Estoppel

There is actual agency. There is no actual agency. Hence, he

Hence, he has rights and has no rights and duties as an agent
duties as agent

The principal is liable alone, The one who caused (either the
not the agent principal or agent) is the one
responsible. In both cases, the third
person must have acted in good faith.
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.

Sale, How effected:

1. Through the owner himself: if not made in writing the

contract of sale is unenforceable not void. It is however
subject to ratification.

2. Through an agent of the owner: if not in writing the

contract of sale is not unenforceable but void. It is not
therefore subject to ratification. The authority of the
agent to sell must be in writing, otherwise the sale is
void.
A letter is sufficient authorization to an agent [Jimenez
v. Rabot].

Is Repurchase Included Within the Contemplation of Law?

The law speaks of Sale. Repurchase, however, through an agent,

partakes of the nature of sale, which when effected through an
agent, the agency should be in writing to be valid (Fernandez v.
Rabot, 4 CAR 221)

Art. 1875. Agency is presumed to be for a compensation, unless

there is proof to the contrary.

The presumption is rebuttable.

Gratuitous Agency: when the service rendered is undertaken to be

gratuitous, the law does not raise an implied promise to pay therefor,
though the service be valuable (Robinson v. Lincoln Trust, 95 NJL 445)
 When is an Agent Entitled to Compensation?

In the absence of a specific agreement, an agent is entitled to

compensation only after he has completely or substantially
completed his obligation as an agent.

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. It

is only after the transaction has been concluded that the broker
acquires vested interest in or right to his commission.

Furthermore, the transaction need not only be perfected but also

consummated to justify broker’s or agent’s commission.
 Measure of Compensation

Compensation depends upon the specific stipulation of the parties.

In the absence of such, compensation shall be based on quantum
meruit basis.
Efficient Procuring Cause

The broker must be the efficient agent. The means employed by him
must result in the sale. He must find the purchaser and the sale
must proceed from his efforts acting as a broker.

Does the law allow double agency?

Double Agency: when the agent is acting simultaneously for

both the seller and the buyer.

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 policy 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 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.) Attorney 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.

f. Attorney-in-fact: One who is given authority by his principal

to do a particular act not of a legal character.
 General Agent v. Special Agent
As to… General agent Special agent
All acts connected w/ Only one or more specific
Scope of the business in which acts in pursuance of particular
authority he is engaged. instructions or w/ restrictions
necessarily implied from the
act to be done.

Nature of Series a transactions Single transaction or a series

service involving a continuity of of transactions not involving
authorized service. continuity of service.
Extent to which By an act within the Cannot in a manner beyond
agent may bind scope of his authority or outside the specific acts
principal although it may be w/c he is authorized to
contrary to his special perform
instructions
Apparent authority does Termination effective as to 3rd
Termination of not terminate by mere party unless agency was for
authority revocation of authority purpose of contracting w/ that
w/o notice to 3rd parties. 3rd party.
 Construction of Merely Strictly construed.

instructions of advisory. Limits the authority of agent.

principal

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.

Agency couched in general terms covers only acts of

administration.

A general power permits an agent to do all acts for which the law
does not require a special power (Dominion Insurance Corp v.
CA, 376 SCRA 244).
 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.
Exception: power of managing partner, he may perform acts
affecting the ownership if the same are necessary to promote or
accomplish a declared object of the partnership.

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.
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;

7.) To loan or borrow money, unless the latter act be urgent

and indispensable for the preservation of the things which
are under administration;

8.) To lease any 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 in a contract of partnership;

11.) To obligate the principal as a guarantor or surety;

12.) To create or convey real rights over immovable property;

 13.) To accept or repudiate an inheritance;

14.) To ratify or recognize obligations contracted before

the agency;

15.) Any other act of strict dominion.

Special Power of Attorney

It is an authority granted by the principal to the agent where
the act for which it is drawn is expressly mentioned.

General Power of Attorney

It is an authority granted to the agent to do all acts of a
particular character. Special power can be included in a
general power, either by giving authority for all acts of a
particular character or by specifying therein the act or
transaction for which a special power is needed.
 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.

Scope of Special Authority to Purchase

Where the agency is a special one, or is restricted to purchases
upon certain terms and conditions, the agent has no authority to

1.) Purchase upon different terms and conditions from

those authorized, or

2.) Modify or rescind a contract of purchase made by the

principal.
Art. 1879. A special power to sell excludes the power to
mortgage; and a special power to mortgage does not include the
power to sell.

The power to sell is different from the power to mortgage in same way
that the latter is different from the power to contract loans.

The following are included in a Power to Sell:

The power to:

1.) Find a purchaser or to sell directly;

2.) Deliver the property;

3.) Make the usual representation and warranty;

4.) Execute the necessary transfer documents;

 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.

The following 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.

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
principal.

What happens if the agent is specifically authorized to

submit to arbitration?

Then the arbitration award binds the principal, provided, of course,

that the agent acted within the scope of his authority.
Art. 1881. The agent must act within the scope of his
authority. He may do such acts as may be conducive
to the accomplishment of the purpose of the agency.

Authority: The power of the agent to affect the legal relations of the
principal by acts done in accordance with the principal’s manifestation
of consent to him.

It is the power of the agent to act within the scope of his assignment
on behalf of his principal with binding effect on the latter.

The authority of the agent is the very essence – sine qua non – of
the principal and agent relationship. This authority, unless it is
otherwise agreed, includes only the authority to act for the benefit of
the principal, and the source of the authority is the principal and
never the agent.
Kinds of Authority:
1.) Actual: when it is actually granted, and it may be express or
implied. It results from what the principal indicates to the agent.

2.) Express: when it is directly conferred by words.

3.) Implied: when it is incidental to the transaction or

reasonably necessary to accomplish the purpose of the
agency, and therefore, the principal is deemed to have actually
intended the agent to possess.

4.) Apparent or Ostensible: when it is conferred by words,

conduct or even by the silence of the principal which causes a 3rd
person reasonably to believe that a particular person, who may
or may not be the principal’s agent, has actual authority to act for
the principal. Ostensible authority is another name for authority
by estoppel.
5.) General: when it refers to all the business of the
principal.

6.) Special: when it is limited only to one or more specific

transactions.
7.) By necessity or by operation of law: when it is demanded
by virtue of the existence of an emergency; it terminates when
the emergency has passed.

Requisites of Agency by necessity:

a.) An emergency actually exist
b.) Agent cannot timely communicate with the principal
c.) Exercise of additional authority is for principal’s own
protection
d.) Adoption of reasonable means to cope with the
situation

e.) Stoppage of authority from the moment the

emergency ceases
 Requisites for Principal to be Bound by Act of
Agent:
1.) The agent must act in behalf of the principal;
2.) The agent must act within the scope of his
authority.

When is a principal not bound by the act of his agent?

When the agent acts without or beyond the scope of his authority; or
when the agent acts within the scope of his authority but in his own
name except when the transaction involves things belonging to the
principal.
Technical difference between Authority and
Power

Authority is the cause, while power is the effect. The former springs
from the principal and is delegated to the agent and by reason thereof,
the agent is empowered to perform the act authorized to be
done.

Authority? Whose behalf? Status of

Transaction
With authority Principal’s Valid
With authority Own Depends. [1883 ]
Without Principal’s Unenforceable
Without Own Valid

Who to sue?
In case the agent acts in the name of the principal and within his
scope of authority, you must name the principal as the defendant.
Note: The authority to look for buyers does not carry with it the
authority to sell.

Special prohibited acts in Agency

1.) The agent is prohibited from buying, even at a public or judicial

auction, property entrusted to him by the principal for sale or
administration, without the consent of the principal.

2.) The agent cannot be a lessee of said property

3.) By analogy, he cannot also be a mortgagee of the

principal’s property.
Art. 1882. The limits of the agent’s authority shall not be
considered exceeded should it have been performed in a
manner more advantageous to the principal than that specified
by him.

What happens if the agent exceeds his authority but he

performs the agency in a manner more advantageous to the
principal?

It will be as if he did not exceed the limits of his authority since he

must do such acts as may be conducive to the accomplishment of
the purpose of the agency.

Article 1882 presupposes sufficient authority to fulfil

the agency.

Test: Would the principal enter into this transaction?

Example: the agent is authorized to sell cell phones by
instalment, but he was able to sell it in cash.

Art. 1883. If an agent acts in his own name, the principal

has no right of action against the persons with whom
the agent contracted; neither have such persons against
the principal.

In such case the agent is the one directly bound in favor of the
person with whom he has contracted, as if the transaction were
his own, except when the contract involves things belonging to
the principal.
 The provisions of this article shall be understood to be
without prejudice to the actions between the principal
and agent.

Kinds of Principals:

1.) Disclosed: if at the time of the transaction contracted by the

agent, the other party thereto has known that the agent is acting for
a principal and has known the principal’s identity.

2.) Partially disclosed: if the other party knows or has reason to

know that the agent is or may be acting for a principal but is
unaware of the principal’s identity. The partially disclosed principal
may enforce against the 3rd person the contract of the agent like any
disclosed principal. Similarly, the 3rd person has a right of action
against the principal.
 3.) Undisclosed: if the party has no notice of the fact that the
agent is acting as such for a principal.

General Rule in 1883: If the agent is authorized to act on behalf of

the principal but instead acts in his own name, the agent is the one
directly liable to the person with whom he had contracted as if the
transaction were his own.

Reason why the agent is personally liable:

1.) He did not act within the scope of his authority

2.) He act in his own name not in the name or representation

of the principal
Exception: If the contract involves something belonging to the
principal. This exception applies only when the agent has in fact
been authorized by the principal.

Remedy of the Principal if this situation arises:

He can demand from the agent damages for his failure to
comply with the agency.

May the agent who is directly bound sue on his

own name?

When the agent transact business in his own name for the benefit
of an undisclosed principal, he may sue or be sued, in his
individual capacity there being no action for or against the
undisclosed principal.
When the principal is disclosed, action must be filed
by or against him

An action on behalf and for the benefit of the principal cannot be

brought in the name of the agent or attorney-in-fact. It must
brought in the name of the real party in interest.

Remedy of the 3rd person with whom the agent

contracted in case the obligation is not complied with:

If the case falls under the general rule, he can sue the agent.
But when the contract involves things belonging to the
principal, he can sue the principal. But if it cannot be
determined w/o litigation who is liable, he can sue both.
Remedy of 3rd person in case authority of the agent is
doubtful

The agent should be included in the case as party defendant.

This is a suit against alternative defendants.

Effects when an agent becomes the assignee

The agent may in his own behalf bring an action founded

on a contract made for his principal, as an assignee of
such contract.

Prepared by:

Lizglen L. Gliponeo
Group 6