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Agency law Third-party General agent Special agent Mandate Principal Agent Procuratio Mandatum.

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Presentation on theme: "Agency law Third-party General agent Special agent Mandate Principal Agent Procuratio Mandatum."— Presentation transcript:

1 Agency law Third-party General agent Special agent Mandate Principal Agent Procuratio Mandatum

2 Agency relationship P asks A to sell his chariot for 100 denarii. A agrees. What are the issues? Mandate –Duties of agent –Duties of principal –Term Authority (representation) –Actual authority (within mandate) –Apparent authority (“abstract” power) –Inherent authority (recognized by law)

3 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?

4 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.

5 Restatement of the Law, Second, Agency (1957) Chapter 13 Duties and Liabilities of Agent to Principal Introductory Note Agency is both a consensual and a fiduciary relation. Normally it is the result of a contract between the parties. Where this is true, the agent's duties include the performance of any contractual obligations; failure to perform these, if without excuse, is a breach of contract. Chapter 14 - Duties and Liabilities of Principal to Agent Introductory Note The relation of principal and agent is based upon the manifestations of consent by the parties …. Correlative with the duties of the agent to serve loyally and obediently are the principal's duties of compensation, indemnity, and protection.

6 Creation of agency P employs A to sell his car. A, without saying he is acting on behalf of P, sells the car to T. Is P bound under the German Civil Code? No. The mandate creates a relationship only between A and P. Yes. Even if T does not know of the relation between P and A, P is bound.

7 Creation of agency P employs A to sell his car. A, without saying he is acting on behalf of P, sells the car to T. Is P bound under the German Civil Code? No. The mandate creates a relationship only between A and P. Yes. Even if T does not know of the relation between P and A, P is bound.

8 Creation of agency P employs A to sell his car. A, without saying he is acting on behalf of P, sells the car to T. Is P bound under the German Civil Code? No. The mandate creates a relationship only between A and P. Yes. Even if T does not know of the relation between P and A, P is bound.

9 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

10 Apparent authority P employs A, a minor, without the permission of A’s guardian. A, acting on behalf of P, purchases goods from T. Is P bound under the German Civil Code? No. A lacks capacity to contract, and thus cannot be P’s agent. Yes. If P has let T know that A is his agent, P is bound.

11 Apparent authority P employs A, a minor, without the permission of A’s guardian. A, acting on behalf of P, purchases goods from T. Is P bound under the German Civil Code? No. A lacks capacity to contract, and thus cannot be P’s agent. Yes. If P has let T know that A is his agent, P is bound.

12 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.

13 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.

14 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?

15 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.

16 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).

17 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).

18 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.

19 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]

20 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?

21 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

22 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?

23 Power of attorney Form Scope –Special –General Limitations on general agency –Statutory limits –Rules of construction –Judicial interpretation

24 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”

25 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”

26 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!?

27 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?

28 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?

29 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 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 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?

30 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

31 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.”

32 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?

33 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

34 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

35 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

36 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.

37 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.


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