Sicad_0116(1).docx

Continuation of the discussion on the elements of a contract…

the authority to represent the principal and bind him. 3.

Elements of a contract: 1. Consent 2. Cause or consideration – the why of the contract. In a contract of agency, the cause, on the part of the principal is the convenience or the act done by the agent on behalf of the principal. On the part of the agent, it could either be gratuity or the compensation he receives for his services.  Ma’am: In certain situations (recall Ma’am’s example of the student who would not give up his slot for a blockmate who gave him valuable help), an agent’s gratuity does not seem to play a factor. It has to be based on “utang na loob” so there is still something owed.  Suppose that a principal hires someone to construct a building. How can you tell if the person hired is an independent contract, employee, or agent? Independent Employee Agent Contractor He furnishes his He is given a Same situation own materials plan and the as an employee and is given employer but is also given absolutely free supplies the the authority to reign to do it materials. purchase any and is paid for additional the finished materials which product. the principal would be liable for. 



If control is to be used as the sole determining factor as to whether there is a contract of agency, it would seem that the employee and the agent are under the same degree of control in so far as the principal is dictating how the work is to be done. In that sense, control is not the controlling factor. A better determining factor is the level of discretionary power given by a person to another. The employee, in the example given, was not given discretionary powers while the agent was authorized to purchase more materials should he deem it necessary. i. Recall that the point of agency is representation. Only the agent was given

Object 

In a contract of agency, the subject is the representation made by the agent on behalf of the principal. i. But the agent cannot do personal acts, criminal acts, and prohibited acts.

Rallos v. Felix Go Chan Facts: Two sisters co-owned a parcel of land. They executed a special power of attorney in favour of Simeon, their brother, authorizing him to sell the lot. Simeon sold the undivided share of the lot to the respondent. The administrator of the estate of one of the sisters filed a case alleging that the sale was unenforceable as the sale was made after the death of one of the sisters. The CFI granted the petition but the CA reversed. Held: The essential elements of agency are: (1) the consent, express or implied, of the parties, (2) the object is the execution of a juridical act in relation to a third person, (3) the agent acts as a representative and not for himself, and (4) the agent acts within the scope of his authority. By reason of the very nature of the relation between the principal and the agent, agency is extinguished by the death of the principal or the agent. By legal fiction, the agent’s exercise of authority is regarded as an execution of the principal’s continuing will. With death, the principal’s will ceases. The exception to the general rule that the death of the principal extinguished the contract is that the agent acted without the knowledge of the death of the principal and that the third person who contracted with the agent acted in good faith. But the exception does not apply because Simeon already knew of the death of the principal when he sold the latter’s share in the lot.  Ma’am (re the difference between the elements in a contract of agency a contract in general): beyond the contract of agency being simply a contract, there are certain additional characteristics of agency which make it a little bit different from a standard contract.