Lecture slides: Representation Flashcards
What is direct representation?
Where an agent acts in the name and on behalf of the principal
What is (actual) authority?
Intention to create or affect legal relations between Principal and Counterparty
- Perform all acts necessary in the circumstances to achieve the purposes for which the authority was granted
What is apparent authority?
Agent does not have authority (anymore), but the counterparty rightfully believes that the agent has authority
What does apparent authority follow from?
- Conduct of principal
- Surrounding circumstances
- Other circumstances
The conduct of the apparent agent is insufficient
What is agency of necessity?
Action to avert an imminent risk
1. In normal circumstances, an agent’s authority is conferred to him by the principal
2. However, when (cumulative conditions)
- Principal’s property is under an imminent risk
- Urgent action is needed to save it
- Agent is unable to contact / communicate / get a mandate of principal
It may require the necessary remedial action
What is usual authority?
Authority which a person occupying or put into the same kind of position as the agent would normally possess
What is a commercial agency?
Self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person, hereinafter called the principal, or to negotiate and conclude such transactions on behalf of and in the name of that principal
What is a tied agent?
an agent working for multiple principals
What are the two criteria for an agent to work with subagents?
Ordered tasks must not be:
1. Personal or nature
2. Reasonable expected to be executed by agent
Implied authority originates from self-employed nature of commercial agency
Necessitates conclusion of an agency agreement between agent and sub-agent
Direct representation of commercial agency has authoirity to:
- Negotiate agreements, or:
- Contact and foster discussion with (potential) clients in order to conclude an agreement regarding the sale and purchase of goods or services
- Broker: bringing people in contact with each other - Negotiate and conclude agreements
What is continuing authority?
- Agent has a durable (permanent) and stable relation with the principal
- Not occasionally representing the principal
What are the formal requirements to conclude an agency agreement?
- Written or oral agreement for its validity
- Each party may ask for written document to proof the existence of agreement and/or its content
How is continued authority demonstrated?
- Number of affairs arranged
- Regular meetings between them
What are the obligations of the agent?
- Look after his principal’s interests
- Act dutifully and in good faith
- Make proper efforts to negotiate / conclude the contracts (Agent must be (pro)active
- Communicate to Principal all necessary information available to him
- Comply with reasonable recommendations given by principal
What is meant with an agent’s obligation to act dutifully and in good faith?
- Quid with competing side-activities?
If not contractually forbidden: not automatically forbidden/contrary to good faith - Catch-all clause:
Extra obligation
What does the obligation to communicate to the principal all necessary information available to him include?
- All necessary information with regards to clients’ orders
- General information about the market, such as
Remarks and complaints of the customers
Certain clients’ insolvency
Increase decrease of the client portfolio
Direct competitors - Overview of Agent’s results; without being obliged to give a detailed timesheet
What are the five obligations of the principal?
- Act dutifully
- In good faith
- Pay a remuneration to Agent
- Provide Agent with necessary documentation relating to the goods/services concerned.
- Provide Agent the information necessary for the performance of the agency contract:
How can an agent be remunerated?
- Fixed amount
- Commission
- Combination of both
What are the consequences of being self-employed?
agent carries the cost of the performance of the agency agreement.
When is an agent entitled to a commission?
Agent is entitled to commission when the sale transaction is concluded IF:
- Where transaction has been concluded as result of agent’s action
- Sale is concluded with a third party whom he has previously acquired as a customer for transactions of the same kind (indirect commission for backorders)
- Where A is entrusted with a specific geographical area or group of customers
Sales transaction has been entered into with customer belonging to that area or group
- Agent has exclusive right to a specific geographical area or group of customers
Sales transaction has been entered into with a customer belonging to that area or group
Irrelevant who concludes the sales transaction with the client even if agent does not intervene, as long as principal directly or indirectly is involved
When is the commission due?
- Principal has executed transaction
- Principal should, according to his agreement with the third party, have executed the transaction
- Third party has executed the transaction
When is a commission payable?
Commission is payable on last day of the month following the quarter in which the commission came due
When after the termination of the agency agreement does an agent still have the right to a commission?
- If transaction is mainly attributable to commercial agent’s efforts during the period covered by the agency contract AND if the transaction was entered into within a reasonable period after that contract terminated
- Order of counterparty reached the principal or the commercial agent before the agency agreement terminated
Agent has right to commission
What are the different types of termination of the agency agreement?
- Agreement for an indefinite period of time / converted agency agreement
- Each party may terminate agreement
By notice
With respect of a notice period - Fixed term agreement
- Indemnity (customer compenstaiont) for Agent
- Compensatory damages
What are the conditions for indemnity?
- Agent has brought Principal new customers
- Agent has significantly increased the volume of business with existing customers and Principal continues to derive substantial benefits from the business with such customers and
- Payment of indemnity is equitable having regard to all circumstances, particularly on lost commission by agent on business transacted with such customers
What do compensatory damages compensate?
- Depriving agent of commission which proper performance of agency agreement would have procured him whilst providing principal with substantial benefits linked to agents activities
What is the restraint of trade clause?
Agreement restricting business activities of a commercial agent following termination of the agency agreement.
Valid when:
1. Written clause
2. Relates to geographical area or group of customers etc. entrusted to agent and kind of goods covered by his agency under the agency agreement
