Formation and Requirements
Pursuant to Art. 2179 of the Ethiopian civil code, we find two sources of representation: the agreement of the parties or by law. In most cases, the authority to represent a person on a transaction with a third person emanates from the agreement of the parties and seldom, when the social and economic realities so demand, such authority is conferred on a person by operation of the law. When the authority to act on behalf of another emanates from the agreement of the parties, the outcome will be that there will be two separate contracts. These are the internal contract between the principal and the agent and main contract concluded by the agent in the name of the principal with a third party.