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. (Art. 1868)
AGENCY relationship which implies a power in an agent to
contract with a third person on behalf of a principal.
CHARACTERISTICS OF A CONTRACT OF AGENCY
Consensual -- perfected by mere consent
Principal can stand by itself without the need of another
contract
Nominate it has its own name
Unilateral if it is gratuitous because it creates obligations for
only one of the parties, or bilateral if it is for compensation
because it gives rise to reciprocal rights and obligations
Preparatory it is entered into as a means to an end
ESSENTIAL ELEMENTS OF AGENCY
There is consent, express or implied, of the parties to establish
relationship.
The object is execution of juridical act in relation to third
persons.

The agent acts as representative and not for himself.

The agent acts within the scope of his authority.
The relationship of an agent to his principal is fiduciary in character
since it is based on trust and confidence.
PARTIES OF THE CONTRACT
Principal one whom the agent represents and from whom he
derives his authority (any person who is capacitated to act in
his own right may be a principal)
Agent one who acts for and represents another (persons who
are absolutely incapacitated, such as insane person cannot be
agents; he must be competent to bind himself)
ACTS THAT CANNOT BE DONE THRU AN AGENT
Personal acts if personal performance is required by law or
public policy or the agreement of the parties, the doing of the act
by a person on behalf of another does not constitute
performance of the latter.
Criminal acts or acts not allowed by law an attempt to
delegate to another authority to do an act which, if done by the
principal would be illegal, is VOID.

AGENCY DISTINGUISHED FROM SIMMILAR CONTRACTS

Simi

Age

Agency

Loan
borro
wer is
given
mone
y for
purpo
ses of
his
own
and
he
must
gener
ally
return
it
agent
may
be
given
fund
to
advan
ce the
princi
pal's
busin
ess

Lease
of
Servic
e

the
basis
is
employ
ment

the
basis
is
repres
entatio
n

Independent
Contract

Partners
hip

copartners
acts not
only for
his copartners
and the
partners
hip but
also as
principal
of
himself

the independent
contractor
exercises his
employment
independently

agent is subject
to the control
and direction of
the principal
whom he
represents

agent
acts for
his
principal

Negotiorium
gestio

not only without

the authority of
the owner of the
business but is
without his
knowledge;
quasi-contract

representation
is expressly
conferred;
contract

Broker
age

broker
has no
relatio
n with
the
thing
he
buys
or sells

commi
ssion
agent
is one
engag
ed in
the
purcha
se or
sale
for
anothe
r

KINDS OF AGENCY
As to manner of its creation
Express agent has been actually authorized by the
principal either orally or in writing
Implied implied from the acts of the principal, from his
silence or lack of action, or his failure to repudiate the
agency
As to its character
Gratuitous agent receives no compensation for his
services
Compensated or Onerous agent receives
compensation for his services
As to extent of business covered
General comprises all the business of the principal
Special comprises one or more specific transactions
As to authority conferred
Couched in general terms created in general terms and
is deemed to comprise only acts of administration.
Couched in specific terms authorizing only the
performance of a specific act or acts.
As to its nature and effects
Ostensible or representative agent acts in the name
and the representation of the principal
Simple or commission agent acts for the account of the
principal but in his own name.
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. (Art. 1870)
The agency is impliedly accepted if the agent receives a power of
attorney from the principal himself personally without any
objection, both being present.
Power of Attorney written authorization to an agent to perform
specified acts in behalf of his principal which acts, when performed,
shall have binding effect on the principal.
If both the principal and the agent are absent, acceptance by the
agent is not implied from his silence or inaction except when the
principal transmits his power of attorney to the agent, who receives it
without any objection, or 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.
TWO WAYS OF GIVING NOTICE OF AGENCY WITH DIFFERENT
EFFECTS
If by special information, the person pointed as agent is
considered such with respect to the person to whom it was
given.
If by public advertisement, the agent is considered as such
with regard to any person.
The power of attorney must be revoked in the same manner in which
it was given.

Agency

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. (Art. 1874)
Agency is presumed to be for a compensation, unless there is a
proof to the contrary. (Art. 1875)
CLASSIFICATION OF AGENTS
Universal agent authorized to do all acts that the principal
may personally do, and which he can delegate to another the
power of doing.
General agent authorized to transact all business of his
principal, to do all acts connected with a particular trade,
business or employment.
Special or particular agent authorized to act in one or more
specific transactions or to act upon a particular occasion.
An agency couched in general terms may be a general agency or
special agency.
WHEN SPECIAL POWERS OF ATTORNEY ARE NECESSARY (Art.
1878)
To make payment. (Payment is the delivery of money or the
performance in any other manner of an obligation)
To effect novations which put an end to obligations already in
existence at the time the agency is constituted.
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.
To waive an obligation gratuitously.
To convey or acquire immovable.
To make gifts.
To loan or borrow money.
To lease realty to another for more than one year.
To bind the principal to render service gratuitously.
To bind the principal in a contract of partnership.
To obligate the principal as a guarantor or surety.
To create or convey real rights over immovable property
belonging to his principal.
To accept or repudiate inheritance.
To ratify obligations contracted before the agency.
Any other act of strict dominion.
A special power to sell excludes the power to mortgage; and a
special power to mortgage excludes the power to sell (Art. 1879)
A special power to compromise does not authorize submission to
arbitration (Art. 1880)
Authority of an agent power of the agent to affect the legal
relations of the principals by acts done in accordance with the
principals manifestation of consent to him.
KINDS OF AUTHORITY
Actual actually granted and it may be express or implied
Express conferred by words
Implied incidental to the transaction or reasonably necessary
to accomplish the purpose of the agency

Apparent or ostensible conferred by conduct or even by

silence.
General refers to all the business of the principal
Special limited to only one or more specific transactions
Authority by necessity demanded by the virtue of the
existence of emergency.
WHEN PRINCIPAL BOUND BY ACT OF AGENT
Requisites
The agent must act within the scope of his authority.
The agent must act in behalf of the principal.
Ratification by the principal
If the agent acts without authority or in excess or beyond
the scope of his authority, such shall be unenforceable,
unless it is ratified by the person on whose behalf it has
been executed, before it is revoked by the other contracting
party.
The limits of the agents authority shall not be considered exceeded
should it have been performed in a manner more advantageous to
the principal than that specified by him. (Art. 1882)
WHEN PRINCIPAL BOUND BY ACTS OF AGENT BEYOND HIS
POWERS
When principals acts have contributed to deceive a third
person in good faith.

Agency

When the limitations upon the power created by him could not
have been known by the third person.
When the principal has placed in the hands of the agent
instruments signed by him in blank.
When the principal has ratified the acts of the agent.
KINDS OF PRINCIPAL
Disclosed principal other party has notice that the agent is
acting for principal and of the principals identity.
Partially disclosed principal other party has notice that the
agent is or may be acting for a principal but has no notice of the
principals identity.
Undisclosed principal other party has no notice that the
agent is acting for a principal.
If an agent acts in his own name, he is the one directly liable to the
person with whom he had contracted as if the transaction were his
own.
If an agent acts in his own name and involves the things belonging to
the principal, the principal is bound by the act of agent as if the
contract is