Contract of Agency and Its Characteristics

CONTRACT OF
AGENCY AND ITS

CHARACTERISTICS
Chapter 1
NATURE, FORM, AND
KINDS OF AGENCY
Article 1868
By the contract of agency a person bind

himself to render some service or to do
something in representation or on behalf
of another, with the consent or authority
of the latter.
Agency
• Agency, in law, the relationship that exists when one person

or party (the principal) engages another (the agent) to act for
him. Example: to do
his work, to sell his goods, to manage his business
Contract of Agency
• Contract of the agency is a legal relationship, where one person appoints
another to perform on the transactions on his behalf.
Charateristics;
• Agency is a: 1. Principal contract – One entered into by both parties,
on their own accounts, or in the several qualities they assume.
2. Nominate Contract – Are those which have a particular
name to distinguish them; as, purchase and sale, hiring, partnership, loan for use,
deposit, and the like. 3. Bilateral contract – A contract in which both parties
exchange promises to perform. One party’s promise serves as consideration for the
promise of the other. As a result, each party is an obligor on that party’s own promise
and an obligee on other’s promise.
• 3. Bilateral contract – A contract in which both parties exchange promises
to perform. One party’s promise serves as consideration for the promise of
the other. As a result, each party is an obligor on that party’s own promise
and an obligee on other’s promise.
• 4. Preparatory Contract – The parties do not consider the contract as an
end by itself, but as a means thru which future transaction or contracts
may be made.
5. Commutative contract – one in which each of the contracting parties gives
and receives an equivalent.
6. Generally
onerous contract – A formal agreement that brings disadvantages for one of
the people or companies that have signed it: One of the common problems
facing business is that the business has at some point entered into an onerous
contract that adds cashflow burdens without the corresponding benefits; A
contract in which the unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be received under it.
Parties to the Contract
a) Principal – he whom the agent represents and from whom he derives
authority; he is the one primarily concerned in the contract.
b. Agents – he who acts or stands for

another. Usually, he is given full or partial discretion, but sometimes he
acts under a specific command.
Article 1864
Article 1865
Article 1866
Article 1867
Article 1868
• By the contract of agency a person binds himself to render some service
or to do something in representation or on behalf of another, with the
consent or authority of the latter.
Article 1869
• Agency may be express, or implied from the acts of the principal, from his
silence or agency, knowing that another person is acting on his behalf
without authority. Agency may be oral, unless the law requires a specific
form.
Article 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.
Article 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.
Article 1872
• Between persons who are absent, the acceptance of the agency cannot be
implied from the silence of the agent, except;
Article 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.
Article 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.
Article 1875
• Agency is presumed to be for a compensation, unless there is proof to the
contrary.
Article 1876
• An agency is either general or special.
The
former comprise all the business of the principal. The latter, one or more
specific transactions.
Article 1877
• An agency couched in general terms comprise 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 authorized a general and unlimited
management.
Article 1878
• Special powers of attorney are necessary in the following cases;
Article 1879
• A special power to sell excludes the power to mortgage; and a special
power to mortgage does not include the power to sell.
Article 1880
• A special power to comprise does not authorize submission to arbitration.
Article 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.
Article 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.
Article 1883
• If an agent

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CONTRACT OF

AGENCY AND ITS

By the contract of agency a person bind

• Agency, in law, the relationship that exists when one person

b. Agents – he who acts or stands for

The power shall continue to be in full force until the notice is

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