OHADAC PRINCIPLES ON INTERNATIONAL COMMERCIAL CONTRACTS

Article 2.3.1

Scope of the section

1. This Section governs the authority of a person (“the agent”) to affect the legal sphere of another (“the principal”) by a contract with a third party, whether the agent acts in the name of the principal or in its own name.

2. This Section does not govern the internal relations between the agent and the principal.

3. This Section does not govern the authority conferred by law to an agent or the authority of an agent appointed by a public or judicial authority.

This Section deals with the regulation of the authority of the agent to affect the legal position of the principal by means of the contracts that the agent may conclude with a third party, that establish direct legal links between the agent and the principal. This Section, therefore, only concerns the relations between the principal and the agent on the one hand, and the third party on the other hand. In other words, it focuses on the external relations of the authority. Internal relations between the principal and the agent are therefore excluded. Information in this regard (rights and obligations between the principal and the agent) will be found in the provisions of their contract and the law applicable to that contract under private international law of the forum. Specific rules must also be considered, such as mandatory rules for the protection of some specific types of agency relationships, for example, independent commercial agents in the OHADAC territories where the European law is applicable, which guarantees the agent certain rights in case of unilateral termination of the contract by the principal. This means that questions concerning the internal as well as external relations of the authority, such as the conditions of granting and termination of authority, conflicts of interest or the replacement of the agent, will be addressed in this section only from the view point of their effects on third parties.

This Section deals only with intermediaries who have authority to conclude contracts. Intermediaries whose task it is to introduce the parties to each other so they can later negotiate and conclude a contract (brokers or state agents, for example), or negotiate contracts with third parties but without the capacity to conclude them, this task being reserved to the person on whose behalf they are acting (employed representatives or independent commercial agents not authorised to conclude contracts) are outside the scope of this Section. None of these instances are cases of representation, although the above-mentioned intermediaries are sometimes incorrectly called “representatives”.

Given the special nature of representation characterised by the intervention of three parties (principal, agent and third party), the application of this Section to the said relations will necessarily require the acceptance of the OHADAC Principles by the three parties involved. In short, a “trilateral” agreement around the application of the Principles will be necessary. Given the absence of a direct link between the principal and the third party, that agreement should be broken down in two phases. The first one, in the cases of express authority of the agent, should correspond to date of granting of the authority, and specify that the principal has given authority to the agent to conclude contracts with third parties “in accordance with the provisions of the OHADAC Principles”. The second one will coincide with the moment of the conclusion of the contract between the agent and the third party, with the inclusion of a clause requiring that the contract be governed by these Principles. This stage will obviously be altered in cases of implied authority, apparent authority or lack of authority, although in such cases, the acceptance by the principal of the application of the Principles will take place, generally, after the conclusion of the contract between the agent and the third party. In the case of lack of authority, this time will coincide with the ratification. This ex post acceptance of the Principles must not necessarily be express. It can be also tacitly carried out, as in cases where the principal proceeds to perform its obligations under the contract agreed on his behalf by the agent without objection to the clause claiming the application of the Principles to the contract.

Moreover, given the non-imperative nature of the rules on representation existing in the different national regulations, the “trilateral” agreement reached by the parties to the representation concerning the application of the OHADAC Principles will necessarily imply the moving aside of the domestic regulations on the matter. Nevertheless, the regime of these Principles is usually in line with domestic regulations, since they are contain principles common to the various national laws.

As mentioned, the OHADAC Principles restrict the scope of application of this Section to the external relations of representation. They therefore differ in this respect from the model followed by most Caribbean civil law systems (Articles 2.142-2.199 of the Colombian Civil Code; Articles 1.251-1.294 Costa Rican Civil Code; Articles 1.984-2.010 Dominican and French Civil Code; Articles 1.686-1.727 Guatemalan Civil Code; Articles 1.748-1.774 Haitian Civil Code; Articles 1.888-1.918 Honduran Civil Code; Articles 3.293-3.389 Nicaraguan Civil Code; Articles 1.400-1.430 Panamanian Civil Code; Articles 1.600-1.630 of the Puerto Rican Civil Code; Articles 1.601-1.661 Saint Lucian Civil Code), which do not distinguish between internal and external relationships of representation, because they consider the authority as a mere effect of the mandate contract. This is also the model followed by the common law systems, where, under the concept of “agency”, the relations between principal and third party and relationship between principal and agent are included.

On the contrary, the OHADAC Principles favour what might be called the “Germanic” model of representation, characterised by establishing a clear difference between authority and the base contract, and therefore, between external and internal relationships of representation. This is also the model followed by the Caribbean countries of Dutch tradition [Articles 3:60-3:67 (representation), 7:414-7:424 (mandate) and 7:428-7:445 (commercial agency) Dutch and Suriname Civil Code], by some countries of Spanish tradition [Articles 56-66 (representation) and 398-422 (mandate) of the Cuban Civil Code; Articles 1.800-1.802 (representation) and 2.546-2.604 (mandate) of the Mexican Civil Code, and implicitly, Articles 274 and 310 of the Mexican Commercial Code; Articles 1.169-1.172 (representation) and 1.684-1.712 (mandate) of the Venezuelan Civil Code, and implicitly, Article 95.2 of the Venezuelan Commercial Code], include the various international instruments of unification of contract law [Articles 2.2.1-2.2.10 UP; Articles 3:101-3:304 PECL; Articles II-6:101-II-6:112 DCFR; Geneva Convention of 17 February 1983 on agency in the international sale of goods (hereon GC, not in force)].

Authors and case law in most legal systems that used to follow the first model have eventually developed the distinction between internal and external relationships of representation [Articles 832-844 (representation) y 1.262-1.339 (mandate) of the Colombian Commercial Code; Articles 731-739 (representation) and 804-825 (commission) of the Honduran Commercial Code; Articles 399 and 436 of the Nicaraguan Commercial Code; Articles 604 and 612 of the Panamanian Commercial Code; Article 200 of the Puerto Rican Commercial Code; Articles 60-68 Draft Reform of the French Law of Obligations 23 October 2013].

Moreover, the OHADAC Principles consider that, to qualify the legal situation in which the agent operates, it is not relevant to specify whether the agent is acting in the name of the principal or in its own name. This makes it possible to use this qualification in both situations. All Caribbean common law systems have the principle that it is irrelevant to establish direct legal relations between the principal and the third party. In these systems the direct link between the principal and the third party is recommended in cases where the agent discloses its position to the third party (disclosed agency), whether or not he has revealed the identity of the principal. That is why the disclosed principal may be named/identified or unnamed/unidentified [Universal Steam Navigation Co v James McKelvie & Co (1923), AC 492; Benton v Campbell, Parker & Co Ltd (1925), 2 KB 410; Sections 6.01 (1) and 6.02 (1) Restatement (Third) of Agency]. But even in those cases where the agent, by contracting with the third party, hides the existence of the representation (undisclosed agency), the possibility of establishing direct links between the principal and the third party is admitted once the third party discloses that the person he was dealing with was actually acting as an agent for another one (undisclosed principal) (Comment on Article 2.3.4).

At this point, it could be said that the OHADAC Principles deviate from the approach followed by the Caribbean systems of Spanish, French and Dutch tradition, where the direct effect of the acts of the agent in the legal position of the principal is conditional upon the acting of the agent in the name of the principal. This differentiates between direct and indirect representation depending on the fact that the agent acts in the name of the principal or in its own name. (Articles 1.505 and 2.177 of the Colombian Civil Code and 832, 833.1, 1.336 and 1.337 of the Colombian Commercial Code; Articles 1.275 of the Costa Rican Civil Code and 273 and 318 of the Costa Rican Commercial Code; Articles 57 of the Cuban Civil Code and 245-247, 284-285 and 287 of the Cuban Commercial Code; Articles 1.984.1° of the Dominican Civil Code and 94 of the Dominican Commercial Code; Articles 1.984 of the French Civil Code and Article L132 -1 of the French Commercial Code; Article 61 Draft project reform of the French law on obligations of 2013; Article 1.686.2 of the Guatemalan Civil Code : Articles 1.748 and 1.762 of the Haitian Civil Code and 90-91 of the Haitian Commercial Code; Articles 3:60.1, 3:66.1 and 7:425-7:427 of the Dutch and Suriname Civil Code; Articles 1.896 and 1.904 of the Honduran Civil Code and 732 Commercial Code; Articles 2.560-2.561 and 2.581 of the Mexican Civil Code and 283-285, 311, 313 of the Mexican Commercial Code; Articles 2.440.1 and 3.331 of the Nicaraguan Civil Code and 408-410, 437 and 439 of the Nicaraguan Commercial Code; Articles 1.110.1 and 1.408 of the Panamanian Civil Code and 606-607, 609 and 612 of the Panamanian Commercial Code; Articles 1.211.1 and 1.608 of the Puerto Rican Civil Code and 163-165, 202-203 and 205 of the Puerto Rican Commercial Code; Articles 1.615-1.616 and 1.627.1 of the Saint Lucian Civil Code; Articles 1.169 of the Venezuelan Civil Code and 96-97 and 376-379 of the Venezuelan Commercial Code). Such systems, indeed, only envisage the basic effect of the agency, that is the direct link between the principal and the third party, in cases of direct agency, in which the agent acts in the name of the principal. It is commonly considered that the agent does so when, at the time of contracting, he reveals expressly the third party, under any formula, apart from its condition of agent, the identity of the principal (indicating, i.e. that it acts for “X”, in the name of “X”, as a representative for “X”, etc.), even if finally it is not included in the contract. Contemplation domini also characterises cases where the agent only declares that it acts in the name of a principal, but it does not initially reveal his identity, assuming the commitment to disclose it at a later moment. It is also possible that none of these extremes are expressly disclosed, but can be easily deduced from the unmistakable behaviour of the agent or due to other elements.

The representative effect does not take place, however, in the cases of indirect representation, in which the agent acts in its own name, concealing his capacity of agent from the third party. In such cases, the agent, and not the principal, will be personally liable to the third party. There is an exception to this rule in certain domestic legal systems in relation to the things belonging to the principal (Article 1.896.2 Honduran Civil Code; Article 2.561.2 Mexican Civil Code; Article 1.408.2 Panamanian Civil Code; Article 1.608.2 of the Puerto Rican Civil Code). How the agent should transfer the principal the rights acquired from the third party on the principal's interest or how the agent should cover the obligations acquired with the third party will be decided within the framework of the internal relationship between the principal and the agent. However, we must not forget that even some civil law systems provide some exceptions to the general rule establishing that the principal is not obliged in cases of indirect representation, and admit the possibility that, in some situations, the principal may claim against the third party directly, or conversely, that the third party may directly claim against the principal (Comment on Article 2.3.4).

The solution adopted by the OHADAC Principles clearly coincides with those on the GC (Article 1.1 and 4) and the UP [Articles 2.2.1 (1), 2.2.3 and 2.2.4 (2)], which also expressly provides the irrelevance of the fact that the agent acts in its own name or in the name of the principal in order to bind this one towards the third party. This solution is not far from that offered by either the DCFR (Articles II-6:105 and II-6:106) or the PECL [Articles 3:102 and 3:301 (2) a 3:304]. Although these instruments are based on the distinction between situations in which the acts of the agent affect the legal position of the principal and those where they do not, that is between direct and indirect representation, they leave the possibility, through a legal rule, that these legal effects actually occur.

Finally, this Section refers only to voluntary representation, that is the representation that has its origin in a voluntary act of the principal intended to authorise the agent to act on his behalf (power),all the while widening his scope of action. In some cases, this voluntary act materialises in a unilateral proxy deed granted on a one-off basis, and in others it is part of a bilateral contract that binds the agent and the principal. This section does not deal with cases of legal representation, where the agent's authority is conferred by law (as in the representation of minors by their parents, holders of parental rights), as well as in those in which the authority derives from a public or judicial authority (as in the representation of disabled people by their tutors). In these cases, determination of the authority of the agent will be done under the domestic law applicable according to private international law. Aside from these two types of representation, the OHADAC Principles follow the line of the two main international instruments of contract law harmonisation: the UP [Article 2.2.1 (3)] and the PECL [Article 3:101 (2)], which also limit their regulation to voluntary representation.

Organic representation, or representation of companies by their organs, is governed by specific rules in company law, which are usually mandatory. This question will be governed by the law applicable to the company, which will prevail on the general rules of representation included in this Section, whose application will be only subsidiary. The provisions of this Section will be applicable, however, to the voluntary representation of the company by those people that the board of directors has dutifully appointed.


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