Legal agency is one of the most important contracts upon which relationships between individuals, companies, and even government institutions rely. This contract is not new; rather, it is part of the cohesive legal framework aimed at organizing relationships between parties. Agency grants the principal the right to act on behalf of the principal, thus facilitating the completion of tasks and transactions that the principal may find difficult to carry out personally.
Definition of Legal Agency
According to Article 716 of the Civil Code, an agency is defined as a contract by which a person is appointed to perform a specific legal action on behalf of another person, known as the principal. From this definition, it is clear that agency grants the agent specific powers, whether in legal or financial matters, provided that the outcomes of those actions benefit the principal and not the agent.
An agency contract is a consensual contract, meaning that the agreement between the agent and the principal is sufficient for its formation, and it is considered a fiduciary contract. This contract represents a dual interest, where both parties exchange trust and commitment to execute the contract in a manner beneficial to both.
Types of Legal Agency
The agency is divided into two main types based on the work assigned to the agent:
– General Agency: This involves broad actions that do not require specific details about the type of transaction or action. It allows the agent to act on behalf of the principal in general matters such as property management or financial affairs.
– Special Agency: This is limited to a specific legal action or transaction. For example, the agent may be tasked with purchasing property or entering into a particular contract on behalf of the principal. The work required must be clear and specifically defined by the principal, according to Article 720.
Effects Resulting from the Agency Contract
The agency contract produces a series of obligations for both the agent and the principal. It also results in legal effects aimed at protecting the principal’s rights and ensuring fair fulfillment of obligations.
Agent’s Obligations
The law requires the agent to comply with the instructions issued by the principal and mandates the agent to respect the boundaries of the agency, except in certain cases defined by law, such as:
1. Executing the task within the scope of the assignment: The agent is required not to exceed the boundaries of the agency unless urgent circumstances arise, and in the event of difficulty in contacting the principal. In such cases, the agent must immediately inform the principal of their actions (Article 722).
2. Informing the principal of execution details: The agent is legally obligated to provide the principal with an account of all actions performed in executing the agency, along with supporting documentation (Article 724).
3. Safeguarding the principal’s property: The agent is prohibited from using the principal’s property for personal gain. If this is violated, the principal has the right to claim compensation.
Principal’s Obligations
The principal has several obligations towards the agent, including:
1. Payment of agency fees (if any): The default assumption is that the agency is without compensation, but if an agreed-upon fee exists, the principal is required to pay. If a dispute arises regarding the fee, the agent may seek judicial determination (Article 729).
2. Reimbursement of expenses incurred by the agent: The principal must compensate the agent for any expenses incurred while carrying out the agency, including any advance expenses requested by the agent for fulfilling the assigned task (Article 730).
3. Compensation for damages: If the agent suffers harm while performing the agency, the principal must compensate the agent unless the harm was due to the agent’s own fault (Article 731).
Termination of Agency and Dismissal of the Agent
An agency has a specific duration and terminates either upon completion of the task, expiration of the agreed term, or dismissal of the agent. The principal has the right to dismiss the agent at any time, and the agent also has the right to withdraw from the task, provided they notify the principal in advance, unless otherwise stipulated. However, the provisions governing agency must be observed, such as ensuring the protection of both parties’ rights and avoiding harm to the principal’s interests in case of sudden dismissal without just cause.
Conclusion
Legal agency is one of the foundational tools that facilitates the efficient execution of transactions in both public and private sectors. It combines freedom with organizational trust between the parties. The law provides comprehensive protection for the agency by ensuring the principal’s rights and clearly defining the agent’s obligations. Moreover, the agency emerges as a flexible legal tool that adapts to varying circumstances, allowing for widespread use that serves the interests of the parties involved and meets their needs effectively.