04-1 Obligations of the Principal - Obligations of Princiapls to Agents

Question 1

What are the obligations of principals to agents?

Answer 1

The obligations of principals to agents are:

1. Advance/Reimburse sums or expenses necessary for the execution of the agency (Art. 1912);
2. Indemnify the agent for all the damages brought about by the agency provided there was no fault or negligence on the part of the agent (Art. 1913);
3. Solidary liability in case two or more persons have appointed an agent for a common transaction or undertaking (Art. 1915);

Question 2

When shall the principal advance to the agent the sums necessary for the execution of the agency?

Answer 2

When the agent makes a request.

Art. 1912. The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency.

Question 3

What is the obligation of the principal if the agent has advanced the necessary sums?

Answer 3

The principal is obliged to reimburse the agent.

Art. 1912. par. 2. Should the agent have advanced them, the principal must reimburse him therefor, even if the business or undertaking was not successful, provided the agent is free from all fault.

Question 4

What shall the reimbursement by the principal of the necessary sums contain?

Answer 4

Art. 1912. par. 3. The reimbursement shall include interest on the sums advanced, from the day on which the advance was made.

Question 5

What gives rise to the right of the agent to retain the thing which is the object of the agency?

Answer 5

When the principal has not yet paid the reimbursement for necessary sums advanced by the agents, or when the principal has not yet paid the indemnity of the agency for damages resulting from the agency without fault or negligence on the part of the agent.

Art. 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles (1730).

Question 6

When is the principal not liable to pay the expenses incurred by the agent?

Answer 6

Art. 1918. The principal is not liable for the expenses incurred by the agent in the following cases:

1. If the agent acted in contravention of the principal’s instructions, unless the latter should wish to avail himself of the benefits derived from the contract;
2. When the expenses were due to the fault of the agent;
3. When the agent incurred them with knowledge that an unfavorable result would ensure, if the principal was not aware thereof;
4. When it was stipulated that the expenses would be borne by the agent, or that the latter would be allowed only a certain sum. (n)

Question 7

What is the obligation of the principal when the agent suffers damages?

Answer 7

If the damages are as a result of the execution of the agency, the principal is obliged to indemnify the agent. If it is due to the acts of a third person, the principal may not be liable under Art. 1913.

Art. 1913. The principal must also indemnify the agent for all the damages which the executive of the agency may have caused the latter, without fault or negligence on his part. (1729)

Question 8

When will principals be held solidarily liable to the agent?

Answer 8

Art. 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency. (1731)

Question 9

Is the principal obliged to compensate the agent?

Answer 9

Generally, yes because an agency is presumed to be for a compensation, unless there is proof to the contrary. (Art. 1875)