Chapter IX. Principal and Agent

A CONTRACT of agency arises where one person, called the principal, authorizes another, called the agent, who accepts the charge, to represent him, or act on his behalf, and undertakes to be answerable for what that other does within the scope of his authority.

This contract, like others, requires the mutual consent of the parties to it, and that consent may be express or implied in their actions and course of dealing. Thus not only is a wife the agent of her husband for the purpose of supplying herself with necessaries, but a woman with whom a man cohabits occupies the same position as long as the cohabitation continues, Indeed, agency may be constituted by ratification of acts done on behalf of another even without previous authorization. No special formality is required in appointing an agent except in the case of a corporation, or where the agent is authorized to execute a deed on behalf of the principal, in which case the appointment must be by deed.

Whatever a person may do by himself he may appoint an agent to do for him, qui facit per alium facit per se; and anyone of sound mind may be appointed an agent, even one who, like a minor, cannot enter into legally binding contracts for himself, An agent cannot delegate his authority to another, for delegatus non potest subdelegare. Agency is of different kinds, universal, general, or special. A universal agent is empowered to do any acts on behalf of his principal; a general agent is empowered to do all acts in some particular trade, business, or employment; a special agent is authorized to do some particular act for the principal; a del credere agent engages to be responsible to his principal for the purchase money of goods sold by him.

The rights and duties of principal and agent between themselves are settled by their intention as manifested or implied in the contract which they have concluded. In default of express or implied agreements to the contrary the duties of the agent implied by law are: to perform the contract of agency; to observe the limits of his authority and the instructions given him by the principal, as also the customs and usages of the business in which he is employed; in all things left to his discretion to act with the most perfect good faith in the interest and for the benefit of his principal; to exercise due skill, care, and diligence, according to the nature of the business entrusted to him and the terms of the agency; to keep the money and property of his principal separate from his own; to pay over to the principal all moneys received to his use, and to account to him for all secret profits and commissions. No agent is allowed to enter into any transactions in which he has a personal interest at variance with his duty to his principal or from which he obtains any personal benefit or profit, except with the consent of the principal; and any secret commissions or profits which he acquires are considered as received for the principal’s use. This rule of law is just, and it should be adhered to when the agent obtains a fair and equitable remuneration for his services from the principal. It is obvious that the agent may keep secret commissions which he receives from others with the express or implied consent of his principal, and he may be excused in conscience if he retains for his own use the fruits of special and extraordinary diligence which he was not bound by his contract to employ, together with gifts and presents made to him personally to secure or retain his custom, provided that the interests of his principal in nowise suffer in consequence.

The principal on his part is bound to pay a fair remuneration to the agent for his services, to accept the obligations lawfully entered into by the agent in his behalf, and to indemnify him for all expenses and losses that he has incurred in the course of his agency.

Even if a universal or general agent exceeds his authority in a particular instance, yet the principal will be liable if the act came within the agent’s ordinary authority. This is not the case with a special agent, for in this case it is the duty of those who contract with him to satisfy themselves as to the extent of his powers.

As a general rule, the agent incurs no personal liability, for he acts on behalf of his principal, who alone is bound. Contrary to the general rule, the agent will be liable when he conceals his principal, or when he acts without authority, or when he exceeds that authority and fraudulently misrepresents its extent, or when he specially binds himself, though acting as an agent: When the fact of agency is not known, or when the agency is known but the principal is not disclosed, the principal, on being discovered, is held liable as well as the agent. In law, but not in conscience, the principal is liable for the fraud and wrong committed by the agent within the limits of his authority even without the sanction of the principal.

A contract of agency is determined by the death of the principal, by the revocation by the principal of the agent’s authority, by the agent’s renunciation of office with the principal’s consent, by the principal’s bankruptcy, by the effluxion of time, and by the fulfilment of the object for which the agency was created.