LSACT (AGENCY) Study Outline: Page 1

NEW CIVIL CODE PROVISIONS: THE LAW ON AGENCY

Title X. - AGENCY the business in which he is habitually engaged

as an agent, and he did not reply to the letter or
CHAPTER 1 telegram. (n)
NATURE, FORM AND KINDS OF AGENCY
Art. 1873. If a person specially informs another
or states by public advertisement that he has
Art. 1868. By the contract of agency a person
given a power of attorney to a third person, the
binds himself to render some service or to do
latter thereby becomes a duly authorized agent,
something in representation or on behalf of
in the former case with respect to the person
another, with the consent or authority of the
who received the special information, and in
latter. (1709a)
the latter case with regard to any person.
The power shall continue to be in full force until
Art. 1869. Agency may be express, or implied
the notice is rescinded in the same manner in
from the acts of the principal, from his silence
which it was given. (n)
or lack of action, or his failure to repudiate the
agency, knowing that another person is acting
Art. 1874. When a sale of a piece of land or any
on his behalf without authority.
interest therein is through an agent, the
authority of the latter shall be in writing;
Agency may be oral, unless the law requires a
otherwise, the sale shall be void. (n)
specific form. (1710a)
Art. 1875. Agency is presumed to be for a
Art. 1870. Acceptance by the agent may also be
compensation, unless there is proof to the
express, or implied from his acts which carry
contrary. (n)
out the agency, or from his silence or inaction
according to the circumstances. (n)
Art. 1876. An agency is either general or special.
Art. 1871. Between persons who are present,
The former comprises all the business of the
the acceptance of the agency may also be
principal. The latter, one or more specific
implied if the principal delivers his power of
transactions. (1712)
attorney to the agent and the latter receives it
without any objection. (n)
Art. 1877. An agency couched in general terms
comprises only acts of administration, even if
Art. 1872. Between persons who are absent,
the principal should state that he withholds no
the acceptance of the agency cannot be implied
power or that the agent may execute such acts
from the silence of the agent, except:
as he may consider appropriate, or even though
the agency should authorize a general and
(1) When the principal transmits his power of
unlimited management. (n)
attorney to the agent, who receives it without
any objection;
Art. 1878. Special powers of attorney are
necessary in the following cases:
(2) When the principal entrusts to him by letter
or telegram a power of attorney with respect to

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(1) To make such payments as are not usually Art. 1881. The agent must act within the scope
considered as acts of administration; of his authority. He may do such acts as may be
(2) To effect novations which put an end to conducive to the accomplishment of the
obligations already in existence at the time the purpose of the agency. (1714a)
agency was constituted;
(3) To compromise, to submit questions to Art. 1882. The limits of the agent's authority
arbitration, to renounce the right to appeal shall not be considered exceeded should it have
from a judgment, to waive objections to the been performed in a manner more
venue of an action or to abandon a prescription advantageous to the principal than that
already acquired; specified by him. (1715)
(4) To waive any obligation gratuitously;
(5) To enter into any contract by which the Art. 1883. If an agent acts in his own name, the
ownership of an immovable is transmitted or principal has no right of action against the
acquired either gratuitously or for a valuable persons with whom the agent has contracted;
consideration; neither have such persons against the principal.
(6) To make gifts, except customary ones for
charity or those made to employees in the In such case the agent is the one directly bound
business managed by the agent; in favor of the person with whom he has
(7) To loan or borrow money, unless the latter contracted, as if the transaction were his own,
act be urgent and indispensable for the except when the contract involves things
preservation of the things which are under belonging to the principal.
administration;
(8) To lease any real property to another person The provisions of this article shall be
for more than one year; understood to be without prejudice to the
(9) To bind the principal to render some service actions between the principal and agent. (1717)
without compensation;
(10) To bind the principal in a contract of
partnership; CHAPTER 2
(11) To obligate the principal as a guarantor or OBLIGATIONS OF THE AGENT
surety;
(12) To create or convey real rights over Art. 1884. The agent is bound by his acceptance
immovable property; to carry out the agency, and is liable for the
(13) To accept or repudiate an inheritance; damages which, through his non-performance,
(14) To ratify or recognize obligations the principal may suffer.
contracted before the agency; He must also finish the business already begun
(15) Any other act of strict dominion. (n) on the death of the principal, should delay
entail any danger. (1718)
Art. 1879. A special power to sell excludes the
power to mortgage; and a special power to Art. 1885. In case a person declines an agency,
mortgage does not include the power to sell. (n) he is bound to observe the diligence of a good
father of a family in the custody and
Art. 1880. A special power to compromise does preservation of the goods forwarded to him by
not authorize submission to arbitration. (1713a) the owner until the latter should appoint an
agent or take charge of the goods. (n)

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Art. 1886. Should there be a stipulation that the (2) When he was given such power, but without
agent shall advance the necessary funds, he designating the person, and the person
shall be bound to do so except when the appointed was notoriously incompetent or
principal is insolvent. (n) insolvent.

Art. 1887. In the execution of the agency, the All acts of the substitute appointed against the
agent shall act in accordance with the prohibition of the principal shall be void. (1721)
instructions of the principal.
Art. 1893. In the cases mentioned in Nos. 1 and
In default thereof, he shall do all that a good 2 of the preceding article, the principal may
father of a family would do, as required by the furthermore bring an action against the
nature of the business. (1719) substitute with respect to the obligations which
the latter has contracted under the
Art. 1888. An agent shall not carry out an substitution. (1722a)
agency if its execution would manifestly result
in loss or damage to the principal. (n) Art. 1894. The responsibility of two or more
agents, even though they have been appointed
Art. 1889. The agent shall be liable for damages simultaneously, is not solidary, if solidarity has
if, there being a conflict between his interests not been expressly stipulated. (1723)
and those of the principal, he should prefer his
own. (n) Art. 1895. If solidarity has been agreed upon,
each of the agents is responsible for the non-
Art. 1890. If the agent has been empowered to fulfillment of agency, and for the fault or
borrow money, he may himself be the lender at negligence of his fellows agents, except in the
the current rate of interest. If he has been latter case when the fellow agents acted
authorized to lend money at interest, he cannot beyond the scope of their authority. (n)
borrow it without the consent of the principal.
(n) Art. 1896. The agent owes interest on the sums
he has applied to his own use from the day on
Art. 1891. Every agent is bound to render an which he did so, and on those which he still
account of his transactions and to deliver to the owes after the extinguishment of the agency.
principal whatever he may have received by (1724a)
virtue of the agency, even though it may not be
owing to the principal. Art. 1897. The agent who acts as such is not
Every stipulation exempting the agent from the personally liable to the party with whom he
obligation to render an account shall be void. contracts, unless he expressly binds himself or
(1720a) exceeds the limits of his authority without
giving such party sufficient notice of his powers.
Art. 1892. The agent may appoint a substitute if (1725)
the principal has not prohibited him from doing
so; but he shall be responsible for the acts of Art. 1898. If the agent contracts in the name of
the substitute: the principal, exceeding the scope of his
authority, and the principal does not ratify the
(1) When he was not given the power to contract, it shall be void if the party with whom
appoint one; the agent contracted is aware of the limits of

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the powers granted by the principal. In this countermarks, and designate the merchandise
case, however, the agent is liable if he respectively belonging to each principal. (n)
undertook to secure the principal's ratification.
(n) Art. 1905. The commission agent cannot,
without the express or implied consent of the
Art. 1899. If a duly authorized agent acts in principal, sell on credit. Should he do so, the
accordance with the orders of the principal, the principal may demand from him payment in
latter cannot set up the ignorance of the agent cash, but the commission agent shall be entitled
as to circumstances whereof he himself was, or to any interest or benefit, which may result
ought to have been, aware. (n) from such sale. (n)

Art. 1900. So far as third persons are Art. 1906. Should the commission agent, with
concerned, an act is deemed to have been authority of the principal, sell on credit, he shall
performed within the scope of the agent's so inform the principal, with a statement of the
authority, if such act is within the terms of the names of the buyers. Should he fail to do so, the
power of attorney, as written, even if the agent sale shall be deemed to have been made for
has in fact exceeded the limits of his authority cash insofar as the principal is concerned. (n)
according to an understanding between the
principal and the agent. (n) Art. 1907. Should the commission agent receive
on a sale, in addition to the ordinary
Art. 1901. A third person cannot set up the fact commission, another called a guarantee
that the agent has exceeded his powers, if the commission, he shall bear the risk of collection
principal has ratified, or has signified his and shall pay the principal the proceeds of the
willingness to ratify the agent's acts. (n) sale on the same terms agreed upon with the
purchaser. (n)
Art. 1902. A third person with whom the agent
wishes to contract on behalf of the principal Art. 1908. The commission agent who does not
may require the presentation of the power of collect the credits of his principal at the time
attorney, or the instructions as regards the when they become due and demandable shall
agency. Private or secret orders and be liable for damages, unless he proves that he
instructions of the principal do not prejudice exercised due diligence for that purpose. (n)
third persons who have relied upon the power
of attorney or instructions shown them. (n) Art. 1909. The agent is responsible not only for
fraud, but also for negligence, which shall be
Art. 1903. The commission agent shall be judged with more or less rigor by the courts,
responsible for the goods received by him in the according to whether the agency was or was
terms and conditions and as described in the not for a compensation. (1726)
consignment, unless upon receiving them he
should make a written statement of the
damage and deterioration suffered by the CHAPTER 3
same. (n) OBLIGATIONS OF THE PRINCIPAL

Art. 1904. The commission agent who handles Art. 1910. The principal must comply with all
goods of the same kind and mark, which belong the obligations which the agent may have
to different owners, shall distinguish them by contracted within the scope of his authority.

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As for any obligation wherein the agent has that of prior date shall be preferred, without
exceeded his power, the principal is not bound prejudice to the provisions of Article 1544. (n)
except when he ratifies it expressly or tacitly.
(1727) Art. 1917. In the case referred to in the
preceding article, if the agent has acted in good
Art. 1911. Even when the agent has exceeded faith, the principal shall be liable in damages to
his authority, the principal is solidarily liable the third person whose contract must be
with the agent if the former allowed the latter rejected. If the agent acted in bad faith, he
to act as though he had full powers. (n) alone shall be responsible. (n)

Art. 1912. The principal must advance to the Art. 1918. The principal is not liable for the
agent, should the latter so request, the sums expenses incurred by the agent in the following
necessary for the execution of the agency. cases:

Should the agent have advanced them, the (1) If the agent acted in contravention of the
principal must reimburse him therefor, even if principal's instructions, unless the latter should
the business or undertaking was not successful, wish to avail himself of the benefits derived
provided the agent is free from all fault. from the contract;

The reimbursement shall include interest on the (2) When the expenses were due to the fault of
sums advanced, from the day on which the the agent;
advance was made. (1728)
(3) When the agent incurred them with
Art. 1913. The principal must also indemnify the knowledge that an unfavorable result would
agent for all the damages which the execution ensue, if the principal was not aware thereof;
of the agency may have caused the latter,
without fault or negligence on his part. (1729) (4) When it was stipulated that the expenses
would be borne by the agent, or that the latter
Art. 1914. The agent may retain in pledge the would be allowed only a certain sum. (n)
things which are the object of the agency until
the principal effects the reimbursement and
pays the indemnity set forth in the two CHAPTER 4
preceding articles. (1730) MODES OF EXTINGUISHMENT OF AGENCY

Art. 1915. If two or more persons have Art. 1919. Agency is extinguished:
appointed an agent for a common transaction
or undertaking, they shall be solidarily liable to (1) By its revocation;
the agent for all the consequences of the
agency. (1731) (2) By the withdrawal of the agent;

Art. 1916. When two persons contract with (3) By the death, civil interdiction, insanity or
regard to the same thing, one of them with the insolvency of the principal or of the agent;
agent and the other with the principal, and the
two contracts are incompatible with each other, (4) By the dissolution of the firm or corporation
which entrusted or accepted the agency;

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(5) By the accomplishment of the object or Art. 1927. An agency cannot be revoked if a
purpose of the agency; bilateral contract depends upon it, or if it is the
means of fulfilling an obligation already
(6) By the expiration of the period for which the contracted, or if a partner is appointed manager
agency was constituted. (1732a) of a partnership in the contract of partnership
and his removal from the management is
Art. 1920. The principal may revoke the agency unjustifiable. (n)
at will, and compel the agent to return the
document evidencing the agency. Such Art. 1928. The agent may withdraw from the
revocation may be express or implied. (1733a) agency by giving due notice to the principal. If
the latter should suffer any damage by reason
Art. 1921. If the agency has been entrusted for of the withdrawal, the agent must indemnify
the purpose of contracting with specified him therefor, unless the agent should base his
persons, its revocation shall not prejudice the withdrawal upon the impossibility of continuing
latter if they were not given notice thereof. the performance of the agency without grave
(1734) detriment to himself. (1736a)

Art. 1922. If the agent had general powers, Art. 1929. The agent, even if he should
revocation of the agency does not prejudice withdraw from the agency for a valid reason,
third persons who acted in good faith and must continue to act until the principal has had
without knowledge of the revocation. Notice of reasonable opportunity to take the necessary
the revocation in a newspaper of general steps to meet the situation. (1737a)
circulation is a sufficient warning to third
persons. (n) Art. 1930. The agency shall remain in full force
and effect even after the death of the principal,
Art. 1923. The appointment of a new agent for if it has been constituted in the common
the same business or transaction revokes the interest of the latter and of the agent, or in the
previous agency from the day on which notice interest of a third person who has accepted the
thereof was given to the former agent, without stipulation in his favor. (n)
prejudice to the provisions of the two preceding
articles. (1735a) Art. 1931. Anything done by the agent, without
knowledge of the death of the principal or of
Art. 1924. The agency is revoked if the principal any other cause which extinguishes the agency,
directly manages the business entrusted to the is valid and shall be fully effective with respect
agent, dealing directly with third persons. (n) to third persons who may have contracted with
Art. 1925. When two or more principals have him in good faith. (1738)
granted a power of attorney for a common
transaction, any one of them may revoke the Art. 1932. If the agent dies, his heirs must notify
same without the consent of the others. (n) the principal thereof, and in the meantime
adopt such measures as the circumstances may
Art. 1926. A general power of attorney is demand in the interest of the latter. (1739)
revoked by a special one granted to another
agent, as regards the special matter involved in
the latter. (n) - Nothing follows -

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