04-2 Obligations of the Principal - Oblligations of Principals to Third Parties Flashcards
Is there a case where the principal is still liable to the third person even if the agent acted in his own, and that the agent actually acted within his authority?
Yes. The principal is still liable to the third person even if the agent contracted in his own name when the contract involves things belonging to the principal.
Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal.
In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal.
What is the general rule to the obligation of the principal when the agent acts within the scope of his authority?
Art. 1910. par. 1. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.
What is the liability of the principal to a third person which the agent has contracted with simultaneous with the principal’s act of contracting with another third person?
The principal shall be liable for damages to the third person whose contract must be rejected.
Art. 1917. In the case referred to in the preceding article (when two persons contract with regard to the same thing, one of them with the agent and the other with the principal), the principal shall be liable in damages to the third person whose contract must be rejected. If the agent acted in bad faith, he alone shall be responsible. (n)
What is the effect on the principal if the agent has exceeded his authority as to the understanding between the principal and the agent, but has acted within the authority as to the written terms of the power of attorney?
The principal will be bound to the contract because the act is deemed to have been performed within the scope of the agent’s authority.
Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent’s authority, if such act is within the terms of the power of attorney, as written even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. (n)
May the principal still be liable to the third person even if the agent has exceeded his authority?
Yes, when the principal: (1) ratifies the agent’s actions expressly or tacitly; and (2) when the allowed the agent to act as if he had full powers. However, in the second case, the principal is solidarily liable with the agent.
Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.
As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly. (1727)
Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. (n)
What will happen if two persons contract with regard to the same thing? In this case, person A contracts with the agent while person B contracts with the principal.
If the contracts are incompatible with each other, that of the prior date shall be preferred (without prejudice to Art. 1544);
Art. 1916. When two persons contract with regard to the same thing, one of them with the agent and the other with the principal, and the two contracts are incompatible with each other, that of prior date shall be preferred, without prejudice to the provisions of Article 1544. (n)
In case where two third persons contract with regard to the same thing and the contracts are incompatible such that the later one must be rejected, who shall be liable to the third person?
If the agent has acted in good faith, the principal shall be liable in damages to the third person whose contract must be rejected. However, if the agent acted in bad faith, he alone shall be liable.
Art. 1917. In the case referred to in the preceding article, if the agent has acted in good faith, the principal shall be liable in damage to the third person whose contract must be rejected. If the agent acted in bad faith, he alone shall be responsible. (n)
