Agency law
Mandatum
Mandate
Principal
Special
Agent agent
General
agent
Procuratio
Third-party
Agency relationship
• Mandate
P asks A to sell his chariot for
100 denarii. A agrees. What
are the issues?
– Duties of agent
– Duties of principal
– Term
• Authority (representation)
– Actual authority (within
mandate)
– Apparent authority
(“abstract” power)
– Inherent authority
(recognized by law)
Duties of agent (Roman law)
• Fulfill mandate
• Not exceed mandate
• Exercise diligence (loyalty
and care)
• Render accounts
• Transfer rights to principal
What are the rights/duties of agents in the US?
Creation of agency
Restatement of the Law, Second, Agency (1957)
§ 1 Agency; Principal; Agent
(1) Agency is the fiduciary relation which results from the
manifestation of consent by one person to another that the
other shall act on his behalf and subject to his control, and
consent by the other so to act.
(2) The one for whom action is to be taken is the principal.
(3) The one who is to act is the agent.
Restatement of the Law, Second, Agency (1957)
Chapter 13 Duties and Liabilities
of Agent to Principal
Chapter 14 - Duties and Liabilities
of Principal to Agent
Introductory Note
Introductory Note
Agency is both a consensual and
The relation of principal and
a fiduciary relation. Normally it
agent is based upon the
is the result of a contract
between the parties. Where this
manifestations of consent by the
is true, the agent's duties include
parties …. Correlative with the
the performance of any
duties of the agent to serve
contractual obligations; failure
loyally and obediently are the
to perform these, if without
excuse, is a breach of contract.
principal's duties of
compensation, indemnity, and
protection.
Creation of agency
P employs A to sell his
No. The mandate creates
car. A, without saying he
a relationship only
is acting on behalf of P,
between A and P.
sells the car to T.
Is P bound under the
German Civil Code?
Yes. Even if T does not
know of the relation
between P and A, P is
bound.
Creation of agency
P employs A to sell his
No. The mandate creates
car. A, without saying he
a relationship only
is acting on behalf of P,
between A and P.
sells the car to T.
Is P bound under the
German Civil Code?
Yes. Even if T does not
know of the relation
between P and A, P is
bound.
Creation of agency
P employs A to sell his
No. The mandate creates
car. A, without saying he
a relationship only
is acting on behalf of P,
between A and P.
sells the car to T.
Is P bound under the
German Civil Code?
Yes. Even if T does not
know of the relation
between P and A, P is
bound.
Creation of agency
German Civil Code § 164.
(1) A declaration of intention which a person
makes in the name of a principal within the scope
of his agency operates directly both in favor of
and against the principal. It makes no difference
whether the declaration is made expressly in the
name of the principal, or if the circumstances
indicate that it was to be made in his name.
What if “partially disclosed” and PRC? – David
Compare this to “apparent authority” in France - Caitlin
Apparent authority
P employs A, a minor,
No. A lacks capacity to
without the permission
contract, and thus
of A’s guardian. A, acting
cannot be P’s agent.
on behalf of P,
purchases goods from T. Yes. If P has let T know
that A is his agent, P
Is P bound under the
is bound.
German Civil Code?
Apparent authority
P employs A, a minor,
No. A lacks capacity to
without the permission
contract, and thus
of A’s guardian. A, acting
cannot be P’s agent.
on behalf of P,
purchases goods from T. Yes. If P has let T know
that A is his agent, P
Is P bound under the
is bound.
German Civil Code?
Lack of capacity
German Civil Code
§ 165. The validity of a declaration of intention
made by or to an agent is not impaired by the fact
that he is limited in competency to enter into legal
transactions.
§ 242 The obligor must perform in a manner
consistent with good faith taking into account
accepted practice.
P-A contract /agent power
P employs A, an alien,
in violation of the
immigration laws. A,
acting on behalf of P,
sells P’s cattle to T.
Is P bound under the
German Civil Code?
No. If P fires A before the
transaction with T, there is
no mandate – and thus no
representation.
Yes. Even though P has not
created the appearance that
A is his agent, P is bound.
P-A contract /agent power
P employs A, an alien,
in violation of the
immigration laws. A,
acting on behalf of P,
sells P’s cattle to T.
Is P bound under the
German Civil Code?
No. If P fires A before the
transaction with T, there is
no mandate – and thus no
representation.
Yes. Even though P has not
created the appearance that
A is his agent, P is bound.
How handled in US?
Agency law
Restatement of the Law, Second, Agency (1957)
§ 1 Agency, principal, agent [Comment b]
Agency is a legal concept which depends upon the
existence of required factual elements: the manifestation
by the principal that the agent shall act for him, the agent's
acceptance of the undertaking and the understanding of
the parties that the principal is to be in control of the
undertaking.
§ 15 Manifestations of Consent
An agency relation exists only if there has been a
manifestation by the principal to the agent that the agent
may act on his account, and consent by the agent so to act.
Unauthorized agency
The president of a French
bank signs a surety
agreement to be liable
(with a company raising
wrecks on public land) to
the French Government.
The president has no
power to enter into
suretyships!
Is the bank bound?
No. There is no actual
mandate (authority).
No. There is no apparent
authority since the bank
created no impression its
president had such wide
power.
Yes. The government had
reason to believe the
president had power (and
thus did not inquire).
Unauthorized agency
The president of a French
bank signs a surety
agreement to be liable
(with a company raising
wrecks on public land) to
the French Government.
The president has no
power to enter into
suretyships!
Is the bank bound?
Compare to US – David, Valeria
No. There is no actual
mandate (authority).
No. There is no apparent
authority since the bank
created no impression its
president had such wide
power.
Yes. The government had
reason to believe the
president had power (and
thus did not inquire).
Formalities of representation
P and A orally agree
that A will sell
Blackacre, listed in
the German Land
Register as belonging
to P. Without
registering as agent,
A signs a transfer of
title to T.
Is P bound?
No. The mandate must
satisfy the same
formalities as the main
transaction – here
registration in the Land
Register.
Yes. The mandate need not
be registered, even
though the transfer must
be.
Formalities of representation
P and A orally agree
that A will sell
Blackacre, listed in
the German Land
Register as belonging
to P. Without
registering as agent,
A signs a transfer of
title to T.
Is P bound?
No. The mandate must
satisfy the same
formalities as the main
transaction – here
registration in the Land
Register.
Yes. The mandate need not
be registered, even
though the transfer must
be. [Compare to US law – Caitlin]
Formalities of representation
German Civil Code § 167.
(1) A power of attorney is conferred by declaration
to the person who is given the power of attorney
….
(2) The declaration need not be in the form
prescribed for the legal transaction to which the
power of attorney relates.
Does this allow parties to circumvent notary?
Terminate agency
EC Directive on Self-employed Commercial Agents
• Agency contract for indefinite period, either party
may terminate on notice
– Mandatory: one month notice for each year of contract
(up to three years)
– If parties agree to longer notice, same for both parties
• MS must ensure agent –
– Indemnified if brings new customer or significant
volume with existing (continuing “subs benefits”)
– Compensated if deprived of commissions
Compare to US law? Why rigidity? - Valeria
Power of “prokurist”
Boehler-Bieri v. Bucher
(Swiss Federal Court 1912)
Facts: Mrs. B-B owns a real estate firm. Her
husband, registered as Prokurist of her
firm, agreed for the firm to pay S&P to
settle its claims with fellow realtor.
Issue: Is Mrs. B (as owner) bound by her
husband’s silly, unknown, unauthorized
agreement?
Holding: Yes – agreement “possibly” within
scope of firm’s business.
Analysis: Maybe Mrs. B-B’s firm wants to
help out other realtors. Irrelevant
whether “of interest” to Mrs. B-B’s firm
or that she did not know.
How handle renegade agent?
Power of attorney
• Form
• Scope
– Special
– General
• Limitations on general agency
– Statutory limits
– Rules of construction
– Judicial interpretation
Power of attorney
French Civil Code
Italian Civil Code
German Civil Code
__ Power of attorney given either by
public instrument or signed writing
(even letter) or verbally
__ Power of attorney conferred by
declaration to person to whom
given, no need form prescribed for
the legal transaction to which
relates.
__ Power of attorney must have
formalities of contract to be entered
by agent. Third party may always
demand “justification of powers”
Power of attorney
French Civil Code
Italian Civil Code
German Civil Code
F Power of attorney given either by
public instrument or signed writing
(even letter) or verbally
G Power of attorney conferred by
declaration to person to whom
given, no need form prescribed for
the legal transaction to which
relates.
I Power of attorney must have
formalities of contract to be entered
by agent. Third party may always
demand “justification of powers”
Agency law
Hypothetical:
If transfers of title must be by notarial agreement,
can P authorize A to sell Blackacre for P
(observing all necessary formalities) by giving A a
grant of authority – notarized by a NY notary!?
Agency law
New York Executive Law § 135
Every notary public ... is hereby authorized … to receive
and certify … powers of attorney … and for use in another
jurisdiction, to exercise such other powers and duties as by
the … laws of any other … country may be exercised and
performed by notaries public, provided that when
exercising such powers he shall set forth the name of such
other jurisdiction.
Does that do it?
General/special power of attorney
What is the difference between special and
general power of attorney?
Why would ever give somebody a general
power of attorney?
General/special power of attorney
Argentine Civil Code
Art. 1880. General power of attorney only covers acts of
management.
Art 1881. A specific power of attorney is required to:
make non-ordinary payments, settle claims, submit to arbitration, waive appeal or statute of
limitations, waive debts, enter into marriage, acknowledge illegitimate children, make contract
related to real estate, make gifts, lend or borrow money (except when ordinary management), enter a
six-year lease, accept bailments (except when ordinary management), obligate the principal to
perform a service, set up a company, accept an inheritance, admit pre-power obligations, make nonordinary payments, settle claims, submit to arbitration, waive appeal or statute of limitations, waive
debts, enter into marriage, acknowledge illegitimate children, make contract related to real estate,
make gifts, lend or borrow money (except when ordinary management), enter a six-year lease, accept
bailments (except when ordinary management), obligate the principal to perform a service, set up a
company, accept an inheritance, admit pre-power obligations, make non-ordinary payments, settle
claims, submit to arbitration, waive appeal or statute of limitations, waive debts, enter into marriage,
acknowledge illegitimate children, make contract related to real estate, make gifts, lend or borrow
money (except when ordinary management) …
Anything like this in US law?
Delaware General Corporate Law
§ 122. Specific powers.
Every corporation created under this
chapter shall have power to:
(1) Have perpetual succession by its corporate name, unless a limited period of
duration is stated in its certificate of incorporation; (2) Sue and be sued in all
courts and participate, as a party or otherwise, in any judicial, administrative,
arbitrative or other proceeding, in its corporate name; (3) Have a corporate
seal, which may be altered at pleasure, and use the same by causing it or a
facsimile thereof, to be impressed or affixed or in any other manner
reproduced; (4) Purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal property, or any interest therein,
wherever situated, and to sell, convey, lease, exchange, transfer or otherwise
dispose of, or mortgage or pledge, all or any of its property and assets, or any
interest therein, wherever situated; (5) Appoint such officers and agents as the
business of the corporation requires and to pay or otherwise provide for them
suitable compensation; (6) Adopt, amend and repeal bylaws; (7) Wind up and
dissolve itself in the manner provided in this chapter; (8) Conduct its business,
carry on its operations and have offices and exercise its powers within or
without this State; (9) Make donations for the public welfare or for charitable,
scientific or educational purposes, and in time of war or other national
emergency in aid thereof; (10) Be an incorporator, promoter or manager of
other corporations of any type or kind; (11) Participate with others in any
corporation, partnership, limited partnership, joint venture or other association
of any kind, or in any transaction, undertaking or arrangement which the
participating corporation would have power to conduct by itself, whether or
not such participation involves sharing or delegation of control with or to
others; (12) Transact any lawful business which the corporation's board
of directors shall find to be in aid of governmental authority;
(13) Make contracts, including contracts of guaranty and suretyship,
incur liabilities, borrow money at such rates of interest as the
corporation may determine, issue its notes, bonds and other
obligations, and secure any of its obligations by mortgage, pledge or
other encumbrance of all or any of its property, franchises and income,
and make contracts of guaranty and suretyship which are necessary or
convenient to the conduct, promotion or attainment of the business of
(a) a corporation all of the outstanding stock of which is owned,
directly or indirectly, by the contracting corporation, or (b) a
corporation which owns, directly or indirectly, all of the outstanding
stock of the contracting corporation, or (c) a corporation all of the
outstanding stock of which is owned, directly or indirectly, by a
corporation which owns, directly or indirectly, all of the outstanding
stock of the contracting corporation, which contracts of guaranty and
suretyship shall be deemed to be necessary or convenient to the
conduct, promotion or attainment of the business of the contracting
corporation, and make other contracts of guaranty and suretyship
which are necessary or convenient to the conduct, promotion or
attainment of the business of the contracting corporation; (14) Lend
money for its corporate purposes, invest and reinvest its funds, and
take, hold and deal with real and personal property as security for the
payment of funds so loaned or invested; (15) Pay pensions and
establish and carry out pension, profit sharing, stock option, stock
purchase, stock bonus, retirement, benefit, incentive and compensation
plans, trusts and provisions for any or all of its directors, officers and
employees, and for any or all of the directors, officers and employees
of its subsidiaries (16) Provide insurance for its benefit on the life of
any of its directors, officers or employees, or on the life of any
stockholder for the purpose of acquiring at such stockholder's death
shares of its stock owned by such stockholder
General/special power of attorney
Owner wants to give
his children profits
from his farm, during
their lifetimes, but
have his trusted niece
run the farm. Can he
do this?
Solution:
“Owner grants to
Agent a general power
of attorney over the
farm.”
General/special power of attorney
French Civil Code
Art. 1988. An agency worded in general terms includes
only acts of management. Where it is intended [that the
agent is] to transfer or mortgage, or do some other
transaction relating to property ownership, the agency must
be express.
What about Germany?
General/special power of attorney
R v. A (Reichsgericht 1909)
Facts: Mother gives son power of
attorney. Son guarantees business
obligations he owes to R. Son is a
deadbeat, so R sues Mother on
guarantee.
Issue: Is Mother bound by guarantee?
(Mother argues Son must
“represent her interests” – not his.
Like guardian, agent cannot
guarantee his own obligations.
Third party argues only exception
to general agency arises when
third party colludes or can
recognize abuse.)
Holding: Holding: Yes – Mother
bound.
Analysis: “overly harsh” - Ben
R v. A (Reichsgericht 1909)
• Code prohibition against agent entering contract on behalf
of principal with himself - technically not applicable
• Prohibition against guardian using property of ward to
guarantee own obligations - not analogous.
• General agency created by will of principal – disputed
transaction need not be within “interest” (internal matter)
but whether (a) collusion, (b) manifest abuse of power
recognized by third party, (c) extraordinary transaction
• Conflict of interest here not necessarily “manifest abuse” –
since there may be reasons why Mother would guarantee
Son’s obligations
General/special power of attorney
Bank v. Bank
(Budesgerichtshof 1966)
Facts: Two Prokurists of Home Bank give
promissory notes to City Bank. The notes,
part of their nefarious scheme, are “very
suspicious”
Issue: Is Home Bank bound, even though
there was no collusion, known abuse,
extraordinary transaction?
Holding: No – Bank not bound (even
though Prokurists).
Analysis: Cases since 1909 create rule that
third party under duty in inquire when
agency “manifestly suspicious” creating
reasonable doubt about bona fides of agent
Prokurist – modern law
You are at a coffee shop in
Frankfurt. A young business man
approaches you and says he works
for a car dealer that is selling its
“loaner” Mercedes Benz for
$15,000.
You ask for his papers –
he is a Prokurist!
Bundesgerichtshof
(1968):
When the third party is
negligent in inquiring
into authority, but so is
principal in controlling
its agent, rules of
comparative
negligence apply.
Prokurist – modern law
You are at a coffee shop in
Frankfurt. A young business man
approaches you and says he works
for a car dealer that is selling its
“loaner” Mercedes Benz for
$15,000.
You ask for his papers –
he is a Prokurist!
Bundesgerichtshof
(1968):
When the third party is
negligent in inquiring
into authority, but so is
principal in controlling
its agent, rules of
comparative
negligence apply.