Sunday, March 7, 2021

CREATION OF AGENCY RELATIONSHIP

How is agency created?

Article 2179 provides for source of agency.

The authority to act on behalf of another may derived from law or contract

According to this article a person, the agent, gets the authority or power to act on behalf of another, the principal, either from the contract entered between him and the principal or from law. Below we will see four situations that give raise to agency relationship.

AGENCY BY AGREEMENT

An agency relationship is a consensual relationship. It is usually formed by agreement (contract) although they may be found in the absence of the contractual agreement. This seems the reason why Article 2199 defines the term agency as a contract.

Article 2199

Agency is a contract where by a person, the agent, agrees with another person, the principal to represent him and to perform on his behalf one or several legally binding acts.

According to the above article the relationship between an agent and a principal is a contractual one. Since their relationship arises from contract, there must be a meeting of mind between the parties in establishing the agency relationship. Besides, the consent of the principal and the agent is necessary. The principal must intend that the agent act for him or her and the agent must intend to accept the authority and to act on it.

In other words the agency relationship arises when the principal expressly or impliedly agreed that the agent acts for him/her and when the agent in her/his side agreed to act for the principal.

As has been discussed above the principal may give the agent the power to act on his behalf expressly or impliedly.

Article 2200(1)

An authority may be conferred upon the agent either expressly or impliedly.

Authority is expressed when the principal specifically describes the extent of the agency power.

Illustration

Ato Kemal enters into a written contract with Ato Awel so that Ato Awel sells Ato Kemal’s house. In this contract of agency Ato Awel’s authority to act for Ato Kemal is express since the extent of the power of Ato Awel is specifically described in the contract and the power is limited to the sale of house.

Implied authority is authority of the agent to do whatever is reasonably necessary for him to accomplish the task he is expressly authorized to perform on behalf of the principal. Implied authority is granted to agent by law because it is not always possible for a principal to foresee every circumstance in which the agent may need to act in order to perform the act the latter is authorized to perform in principal’s behalf.

Illustration

Ato Mersha authorized W/ro Zewdnesh to accept the delivery of 100 quintals of teff from Ato Zenaneh who undertakes to deliver the teff to Ato Mersha upon contract of sale of teff entered between them on October 2005.

In this case W/ro Zewdnesh has express authority to accept the delivery of 100 quintals of teff from Ato Zenaneh. W/ro Zewdnesh also has an implied authority to employ, in the name of Ato Mersha daily laborers who can take the teff to store. She has also implied authority to enter into contract for the deposit of the teff on behalf of Ato Mersha.

AGENCY BY LAW

The authority to act on behalf of another may result from operation of law. Article 2253 of civil code can be cited as an example here. According to this article, courts have a power to appoint individuals known as curators to perform in the name of another, act or acts of a certain kind. According to article 2255(1), curator is appointed by courts to perform acts of urgent nature on behalf of another, where the person to be represented is for some reason or another unable to appoint a representative because he is away, or ill or for any other reason. Appointment of curators by court is provided under the law to safeguard the interest of the person to be representative.

The law has also empowered parents to represent their minor child or children under article 204 of Ethiopian civil code.

Article 204: Authority of parents

The father and minor are, during their marriage jointly guardians and tutors of their minor child.

As can be understood from the reading of the above article, the father and mother of a child are jointly the tutors of their child. Tutors are the persons empowered by law to represent a minor in relation to pecuniary interest and administration of property.  (Please read article 199(2) of your civil code) So, acts done by the father and mother on behalf of their minor child bind the latter as if the minor has performed the act himself, being a major.

Commercial employees are another example of agency by operation of law. It is the law that enables commercial employees who are in charge of sale to represent the trader and act on behalf of the latter under article 32 of commercial code. For example an employee in charge of sale in a store shall be deemed to have a power of agency for the purpose of selling or receiving goods which come within the normal business activity of store of such nature.

Article 28 of Commercial Code

Commercial employees are persons who are bound to trader by a contract of employment and who assist the trader by doing work of non manual nature as a sales man, secretary, accountant, guardian, inspector or director.

 

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