CHAPTER 4

MODES OF EXTINGUISHMENT OF AGENCY

 MODES OF EXTINGUISHMENT OF AGENCY
MNEMONICS:W-A-R-D-E-D

WITHDRAWAL REVOCATIONC DISSOLUTION DEATH

(SUBSEQUENT ACTS OF THE PARTY) (SUBSEQUENT ACTS OF THE PARTY) (OPERATIONS OF LAW) (OPERATIONS OF LAW)

ACCOMPLISHMENT EXPIRATION
(AGREEMENT) (AGREEMENT)

PRESUMPTION OF CONTINUANCE OF AGENCY

TERMINATION OF AGENCY EVEN IF

THE PERIOD HAS YET TO EXPIRE
CIVIL
INSOLVENCY INTERDICTION
The authority of the agent to act for his deprives offender of the right to manage
principal generally ceases by operation of or dispose of his property during the
law upon an adjudication of insolvency period of sentence
INSANITY DEATH
 the relationship between agent and principal comes to On the death of either the agent or the principal, the agency
an end when principal or agent becomes insane, for a is automatically terminated because a person cannot act on
person of unsound mind cannot contract. behalf of non-existent person.
 REVOCATION

REVOCABLE AT WILL RENUNCIATION OF

BY PRINCIPAL AGENCY BY AGENT
LIABILITY OF PRINCIPAL
FOR DAMAGES CAUSED Agency is also
terminable at will of
Where agency constituted for a fixed the agent through
period
The principal shall be liable for damages
REVOCATION BY express or implied.
occasioned by the wrongful discharge of APPOINTMENT OF
the agent before the expiration of the NEW AGENT
period fixed. Principal appoints new agent for
the same business or transaction
provided that the new agent was
Where no time fixed for continuance of REVOCATION BY ONE given an exclusive authority.
agency OF TWO OR MORE
The principal is at liberty to terminate it PRINCIPALS
at will subject only to the requirements
of good faith.
The appointment of a agent by two
REVOCATION BY DIRECT or more principal for a common
MANAGEMENT OF BUSINESS BY transaction makes them solidarily
PRINICPAL HIMSELF
The agency is revoked if the principal directly liable to the agent.
manages the business entrusted to the agent,
dealing directly with third persons
 EFFECT OF REVOCATION IN NOTICE OF REVOCATION
RELATION TO THIRD PERSONS

AGENCY TO CONTRACT AS TO AGENT

WITH SPECIFIC PERSONS
Actual notice must be brought to the
Personal Notice of customers while notice of publication
Revocation is a MUST
is sufficient to other persons.

AGENCY TO CONTRACT
WITH GENERAL PUBLIC
Notice of Revocation MAY AS TO THIRD PERSONS
not be Personal
Not always necessary so long as the
agent knows of the circumstances
indicating termination of the agency

PARTIAL REVOCATION OF GENERAL POWER

Involves two agents where general power is granted to the first agent and
special power is granted to the second agent
 AGENCY COUPLED WITH INTERST

General Rule:

A principal can revoke a contract Not revocable by the sole

of agency at will. will of the principal
Not merely an interest in
the exercise of the
Exception:
power
1. When the agency is created not only for the
interest of the principal but also for the Revocable when interest
interest of third persons. ceases
2. When the agency is created for the mutual
interest of both the principal and agent. It entitles him to
compensation therefor
To be irrevocable, interest of
the agent shall be in the
subject matter of the power
conferred
 WITHDRAW
RIGHT OF AGENT TO WITHDRAW
 Agent may withdraw from the agency
at any time
 Regardless of whether the agency was
gratuitous or with compensation
Based on constitutional prohibition
against involuntary servitude :
1. Without just case
2. With just case
OBLIGATION OF AGENT TO CONTINUE TO
ACT AFTER WITHDRAWAL
Must continue to act as agent until
principal has had reasonable
opportunity to take necessary steps to
remedy the situation
Purpose of law is to prevent damage to
principal

WHEN DEATH OF
PRINCIPAL DOES NOT
TERMINATE AGENCY
If the agency has been
constituted in the common
interest of the principal and the
agent
It has been constituted in the
interest of a third person who
has accepted the stipulation in
his favor.
DEATH
VALIDITY OF ACTS OF
AGENT AFTER DEATH OF
PRINCIPAL
Third persons not prejudiced
where agent acted without
knowledge of the death of the
principal (or of any other cause
which extinguishes the agency)
Requires the agent to act in
good faith (as well as the third
person)
Agent required to finish the
business already begun should
delay entail any danger
DUTY OF AGENT’S HEIRS
TO PROTECT INTEREST
OF PRINCIPAL
If agent dies, agency also
extinguished
Law imposes upon his heirs the
obligation to notify the principal
of his death
Also obliged to adopt such
measures as the circumstances
may demand for the interest of
the principal
Heirs can continue agency only
temporarily, since essence of
agency is personal confidence