Choice of law about agency law in the draft PIL proclamation of Ethiopia

Agency law is also one area of law which is provided with some sorts of solution in the draft PIL
proclamation of Ethiopia.In an agent-principal relationship, choice of law issues can arise when
determining which jurisdiction's laws govern the contractual relationship between the agent
and the principal. Here are some of the potential problems which may arise ;

Agent-Principal Relationship:

1. Jurisdiction of Agreement: When an agent and a principal operate in different states or

countries, there might be a conflict regarding which jurisdiction's laws should govern their
agreement.

2. Mandate of the Agency: Disputes may arise concerning the scope of the agent's authority or
duties. Determining the applicable law to interpret and enforce these terms becomes crucial.

3. Liability and Responsibilities:If the agent's actions lead to legal issues, questions can emerge
about the liability of the principal and which jurisdiction's laws should apply to determine this
liability.

Agent-Third Party Relationship:

1.Contract Formation: When an agent acts on behalf of a principal in dealings with a third party,
there could be uncertainty about which jurisdiction's laws govern the formation, interpretation,
and validity of the contract.

2. Authority of the Agent: Disputes may arise regarding the agent's actual authority, apparent
authority, or implied authority to act on behalf of the principal. Determining the applicable law
becomes essential in defining the scope of the agent's actions.

3. Liability and Disputes: If a third party sues the agent or principal, there may be questions
about the applicable law concerning liability, remedies, and dispute resolution.

Our draft proclamation provides solutions for this potential choice of law problems.

Choice of law in The Relationship Between The Principal and The Agent

Under Article 80 sub article 1 of the proclamation, it provides that Articles 72 and 73 of this
Proclamation shall apply to the relationship between principal and agent. 1 This provisions are
originally provided to deal with matters which arise in contractual relationship. As we know the
authority to act on behalf of another may drive from the contract in addition to law. 2 There are
two kind of contracts, one is between the principal and the agent which is called Internal
1
Article 80 sub 1 of the draft proclamation
Contract or subordinate contract.3 Under this contract the principal concludes contract with the
agent with the intention that the agent could play an important role in the formation of the
main contract with third parties. 4The other is called the external contract or the main contract.
This contract exist between the principal and third party through the agent. As provided under
article 80, article 72 and 73 are applicable only in the case of internal contract between the
principal and the agent.5Based on this ground, the idea of article 80 sub article 1 is that, if any
choice of law problem arise in such contract the laws which are originally provided for law of
contract, are also applicable in agency contract as well.

Under article 72 of the proclamation it's provided that, where a contract involves a foreign
element as laid down in Article 5, the parties may choose the law governing the substance of
the contract, that is the law of nationality, the law of domicile, the law of the place where the
transaction was made, the law of the place where the subject matter is situated, the law of the
place where the transaction is to be performed, or the law of the place which is reasonably
connected to the matter.6This provision give an opportunity to the parties to choose jurisdiction
whose laws will govern any disputes arising from the relationship. The choice can be the law of the
nationality, the law of domicile and others provide under article 72 of the draft.Sub article 2 of the same
provision requires the choice to be explicit or clearly evident from the agreement or from the
circumstances. 7

Applicable Law in Default of Choice

Where the parties have not clearly expressed their intention, contracts shall be governed by the law of
the place with which the contract is significantly connected. 8 The "law of the place with which the
contract is significantly connected" is a principle used in the absence of an explicit choice of law clause
or when the chosen law is unclear or unenforceable. In such cases, the court may look at various factors
to determine which jurisdiction has the most significant connection to the contract. These factors can
be; Location of performance, palace of contract formation, domicile or business place of the parties,

2
Article 2179 of the Ethiopian civil Code
3
Teaching material on Ethiopian law of agency
4
Ibid
5
Article 80 sub 1 of the draft

6
Article 72 of the draft proclamation
7
Article 72 sub 2 of the draft
8
Article 73 of the draft proclamation
subject matter of the contract and there may also be others. By considering these factors, the court
may be able to identity the jurisdiction.

Choice of law problem in the relationship between the principal and the agent

The conditions under which an act of an agent binds the principal to a third party shall be governed by
the law of the country expressly designated by the principal and the third party or, if none is designated,
by the law of the country in which the agent acted, if the principal or the third party has his domicile or
residence in that country. If not, the law of the country which is significantly connected to the case shall
be applicable .9

It's also provided that, in the relationship between an unauthorized agent and a third party, the
provision of article 80 (2) is also applicable. An unauthorized agent, refers to a situation where someone
purports to act on behalf of the principal without proper authority or permission to do so. 10

9
Article 80 sub 2 of draft proclamation
10
Law of Agency Teaching Material