How to terminate a contract of agency

The contract of agency may be extinguished by the following modes:

  1. By revocation of the agency;
  2. By the withdrawal of the agent;
  3. By the death, civil interdiction, insanity or insolvency of the principal or of the agent;
  4. By the dissolution of the firm or corporation which entrusted or accepted the agency;
  5. By the accomplishment of the object or purpose of the agency; or
  6. By the expiration of the period for which the agency was constituted.[1]

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Obligations of the Principal in a Contract of Agency

To be bound by obligations contracted by agent

The principal is required to comply with all the obligations which the agent may have contracted within the scope of his authority.[1] The principal cannot set up the ignorance of the agent as to circumstances whereof the principal himself was, or ought to have been, aware.[2]

Unless the principal expressly or tacitly ratifies an ultra vires act of the agent, the principal is not bound to any obligations where the agent has exceeded his powers.[3]

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Obligations of the Agent

To be liable for damages

The agent is bound by his acceptance to carry out the agency.[1] Consequently, he is liable for the damages which, through his non-performance, the principal may suffer.[2] For business that already began on the death of the principal, the agent must finish the same if delay entails any danger.[3]

Best Legal Practices:

Scope and extent of power expressly stated in written power of attorney – The agent should ensure that the scope and extent of the powers granted to him by the principal be expressly stated in the written power of attorney.

Duties and responsibilities also stipulated in written power of attorney – The agent should also ensure that the exact duties and responsibilities be stipulated in the written power of attorney.

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