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    Northern CPAR: Business Laws – Law on Agency

    NORTHERN CPA REVIEW4th Floor Pelizloy Centrum, Lower Session Road, Baguio City

    Contact Numbers: !"!4#!$%' !"%"$"#"4()mail: nc*ar+yahoocom

     ATTY. ANDRIX DOMINGO, CPABUSINESS LAWSTHE Law on Agency 

    Agency

    - contract whereby a *erson binds himsel. to render some ser/ice or to do something in re*resentation or in behal. o.another, with the consent and authority o. the latter

    Characteristics of agency$ Princi*al" Pre*aratory0 Consensual4 1nerous& Nominate2 Bilateral% Commutati/e

    Parties to a contract of agency, capacity of the parties1. Principal 2. Agent 

    isting!ish agency fro" si"ilar contracts or relations3$ Loan 5 a borrower is gi/en money 3a .or *ur*oses o. his own 3in agency, to ad/ance *rinci*al6s business and he must

    generally 3b return it whether or not the business is success.ul3" Lease o. ser/ice 5 7he 3a basis o. em*loyment and the lessor 3li8e a ser/ant ordinarily 3b *er.orms only ministerial 3not

    discretionary .unctions30 Contract .or a *iece o. wor8 5 7he inde*endent contractor e9ercises his em*loyment inde*endently and not in re*resentation o.

    the em*loyer34 Partnershi* 5 - *artner acts not only .or his co)*artners and the *artnershi* but also as a *rinci*al .or himsel. 3in agency, agent

    acts only .or his *rinci*al3& Negotiorum gestio 5 t is 3a ;uasi)contract' 3b the gestio acts without authority and 8nowledge o. the owner o. the *ro*erty o.

    business although according to his 3c *resumed 3not e9*ress will by e9ercising ect sold3% Bro8erage 5 a bro8er merely 3a an intermediary between the *urchaser and the /endor whose only o..ice is to bring together

    the *arties to the transaction and has 3b no relation to the thing he buys or sells, while a 3commission agent maintains arelation not only with his *rinci*al and the *urchaser or /endor but also with the *ro*erty the sub>ect matter o. the transaction

     which is *laced in his *ossession and at his dis*osal in accordance with his authority3# Relations between guardian and ward ) ?hile the guardian acts .or and in behal. o. his ward, he does not, howe/er, deri/e his

    authority to act .rom the ward

    #o$ agency relationship is create%$ By a**ointment" By rati.ication

    0 By esto**el4 By necessity

    &in%s of agency$ -ccording to .orm

    a. E'press$ 1ral agreement" ?ritten agreement

    b I"plie% 5 an agency may be im*lied .rom the .ollowing:$ -cts o. the *rinci*al" Silence o. the *rinci*al0 Lac8 o. action o. the *rinci*al4 Failure o. the *rinci*al to re*udiate the agency

    2. Accor%ing to e'tenta (eneral agency 5 when it com*rises all the business o. the *rinci*alb Special agency 5 when it com*rises o. one or more s*eci.ic transactions

    ). Accor%ing to a!thority conferre%a Agency co!che% in general ter"s *general po$er of attorney+ b Agency co!che% in specific ter"s   5 a special power of attorney  is re;uired .or the *er.ormance o. the .ollowing

    s*eci.ic acts$ 7o ma8e such *ayments as are not usually considered acts o. administration

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    Northern CPAR: Business Laws – Law on Agency" 7o e..ect no/ations0 7o com*romise4 7o submit ;uestions to arbitration& 7o renounce the right to a**eal .rom a >udgment2 7o wai/e ob>ections to the /enue o. an action% 7o abandon a *rescri*tion already ac;uired# 7o wai/e obligations gratuitously! 7o enter into any contract by which the ownershi* o. an immo/able is transmitted or ac;uired either gratuitously or .or

    a /aluable consideration

    $ 7o ma8e gi.ts$$ 7o loan or borrow money$" 7o lease any real *ro*erty to another *erson .or more than a year$0 7o bind the *rinci*al to render some ser/ice without any com*ensation$4 7o bind the *rinci*al in a contract o. *artnershi*$& 7o obligate the *rinci*al as a guarantor or surety$2 7o create or con/ey real rights o/er immo/able *ro*erty$% 7o acce*t or re*udiate an inheritance$# 7o rati.y or recognize obligations contracted be.ore the agency$! -ny other act o. strict dominion

    . Accor%ing to its character-3a (rat!ito!s 3b Co"pensate% or onero!s 

    . Accor%ing to its nat!re an% effects-3a /stensi0le representatie 5 one where the agent acts in the name and re*resentation o. the *rinci*al' or3b Si"ple or co""ission 5 one where the agent acts .or the account o. the *rinci*al but in his own name

    &in%s of acceptance of agency 0y the agent.$ E'press " I"plie% 

    Anno!nce"ent of appoint"ent 0y an agent$ By s*ecial in.ormation" By *ublic ad/ertisement

    Basic principles of agency$ 7he agent must act within the sco*e o. his authority

    " 7he agent must act in behal. o. his *rinci*al

    /0ligations of an agent/0ligations, in general, of a person $ho accepts an agency$ 7o carry out the agency" 7o be liable .or damages which, through his non)*er.ormance, the *rinci*al may su..er0 7o .inish the business already begun on the death o. the *rinci*al, should delay entail any danger

    Specific o0ligations of an agent$ 7o ad/ance the necessary .unds i. there was a sti*ulation to that e..ect" 7o act in accordance with the instructions o. the *rinci*al0 Not to carry out an agency i. its e9ecution would mani.estly result in loss or damage to the *rinci*al4 7o be liable .or damages i. there being a con.lict between his interest and that o. the *rinci*al, he should *re.er his own& Not to borrow the money o. the *rinci*al without the *rinci*al6s consent, i. the latter has authorized him to lend the *rinci*al6s

    money at interest2 7o render an accounting o. his transactions and to deli/er to the *rinci*al whate/er he may ha/e recei/ed by /irtue o. the

    agency, e/en though it may not be owing to the *rinci*al% -gent6s liability when he a**oints a substitute

    Who is a s!0agent3- sub)agent 3or s!0stit!te is a *erson to whom the agent delegates, as his agent the *er.ormance o. an act .or the *rinci*al

     which the agent has been em*owered to *er.orm

    # Liability o. two or more agents i. they ha/e been a**ointed simultaneously! 7o be liable .or interest on the sums he has a**lied to his own$ -gent6s liability i. he contracts in the name o. the *rinci*al

    @eneral Rule: 7he agent who acts as such shall not be liable to the *arty with whom he contracts(9ce*tions: 7he agent shall be *ersonally liable in the .ollowing cases:a . he e9*ressly binds himsel.b s he e9ceeds the limits o. his authority gi/ing such *arty su..icient notice o. his *owers

    4!les if the other party $as a$are of the agent5s acting 0eyon% the li"its of his a!thority$ . the agent did not underta8e to secure the *rinci*al6s rati.ication, the contract shall be /oid" . the agent undertoo8 to secure the *rinci*al6s rati.ication o. the act and the *rinci*al does not rati.y the same, the

    agent shall be liable0 . the *rinci*al rati.ies the contract, the contract shall be en.orceable against the *rinci*al

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    Northern CPAR: Business Laws – Law on Agency$$ 7o be res*onsible not only .or .raud, but also .or negligence

    Co""ission agentis one who buys and sells goods or chattels consigned or deli/ered to him by his *rinci*al, .or a com*ensation 8nown ascommission(eneral r!le- 7he commission agent cannot sell on creditE'ception- 7he commission agent can sell on credit only with the e9*ress or im*lied consent o. the *rinci*al

    Effects if the co""ission agent sells on cre%it $itho!t principal5s consent$ 7he *rinci*al may demand *ayment .rom him in cash

    " 7he commission agent, howe/er, shall be entitled to any interest or bene.it, which may result .rom such sale%el cre%ere co""issionAel credere commission 3 also called guarantee commission is an additional commission by which the agent 3who also gets his

    ordinary commission shall bear the ris8 o. collection and shall *ay the *rinci*al the *roceeds o. the sale on the sameterms agreed u*on with the *urchaser

    /0ligations of the principal$ 7o com*ly with all the obligations which the agent may ha/e contracted within the sco*e o. his authority" 7o be bound .or any obligation wherein the agent has e9ceeded his *ower i. he rati.ies such obligation e9*ressly or tacitly0 7o be solidarily liable with the agent i. he allowed the latter to act as though he had .ull *owers when the agent e9ceeded his

    authority4 7o ad/ance to the agent sums necessary .or the e9ecution o. the agency should the agent so re;uest& 7o reimburse the agent the sums ad/anced by the latter e/en i. the business or underta8ing was not success.ul *ro/ided the

    agent is .ree .rom all .ault2 7o indemni.y the agent or all damages which the e9ecution o. the agency may ha/e caused the latter, without .ault or

    negligence on his *art% Liability when there are two or more *rinci*als

    E'ting!ish"ent of agency6o%es of e'ting!ish"ent of agency$ By re/ocation" By withdrawal o. the agent0 By the death, ci/il interdiction, insanity or insol/ency o. the *rinci*al or o. the agent4 By the dissolution o. the .irm or cor*oration which entrusted or acce*ted the agency& By the accom*lishment o. the ob>ect or *ur*ose o. the agency2 By the e9*iration o. the *eriod .or which the agency was constituted

    4eocation re.ers to the act o. the *rinci*al o. terminating the agency at will con.idence and re*resentation being the .oundation o.the contract&in%s of reocationa (9*ressb m*lied?hen agency may not be re/o8ed at willa . a bilateral contract de*ends u*on the agencyb . the agency is a means o. .ul.illing an obligation already contractedc . a *artner is a**ointed manager o. a *artnershi* in the contract o. *artnershi* and his remo/al .rom the management is

    un>usti.iabled . agency is cou*led with interest

    With%ra$al 0y the agent

    By the agent gi/ing due notice to the *rinci*al o. his withdrawal

    eath of the principal-s a general rule, the death o. the *rinci*al e9tinguishes the agency Dowe/er, the agency is not e9tinguished in the .ollowing:

    a . the agency has been constituted in the common interest o. the *rinci*al and the agentb . the agency has been constituted in the interest o. a third *erson who has acce*ted the situation in his .a/or

    eath of the agent$ (..ect o. death o. agent in agency

    7he death o. the agent e9tinguishes the agency" Auty o. agent6s heirs

    a Noti.y the *rinci*al o. the agent6s death7o ado*t in the meantime such measures as the circumstances may demand in the interest o. the *rinci*a

    QUIZZER:$ - contract whereby a *erson binds himsel. to render some ser/ice or to do something in re*resentation or in behal. o. another,

     with the consent and authority o. the later is 8nown as:a Contract o. lease o. ser/ices c Contract .or a *iece o. wor8b Contract o. agency d Contract to sell

    " - contract o. agency has the .ollowing characteristics e9ce*t that it is not:a - consensual contract c - nominate contract

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    Northern CPAR: Business Laws – Law on Agencyb -n accessory contract d -bilateral contract

    0 P a**ointed - to be his agent to administer his mango orchard while P is in ES-, but - died lea/ing his son, B, o. legal age to

    ta8e care o. the mango orchard until P arri/ed 7his is an agency created by:

    a (sto**el b Rati.ication c -ssignment d 1*eration o. law

    4 -, a manu.acturer and B, a distributor agreed to a contract where - will deli/er ", units o. -s *roducts to B e/ery month and

    B will sell the *roducts at -s suggested *rices *lus $&G -ll unsold units at the end o. the year shall be bought bac8 by - at

    the same *rice at the time the *roducts were ordered - shall hold B .ree .rom any claim .or de.ects in the units 7he contract

    between - and B is:

    a Contract o. Sale c Contract to lease

    b Sale with right to re*urchase d -gency to sell

    & 7he .ollowing are characteristics o. a contract o. agency, e9ce*t:

    a Consensual b Princi*al c nnominate d Bilateral

    2 n agency, the agent re*resents

    a - *erson who is ca*acitated c Deirs and creditors o. the estate

    b - *erson who is inca*acitated d 7he >udicial court

    % ?hich o. the .ollowing re.ers to a contract o. agencyH

    a De re*resents an inca*acitated *erson c De is controlled by the *rinci*al

    b 7here is no meeting o. minds d 7he legal relation is always created by law

    # 7his re;uires a s*ecial *ower o. attorney, e9ce*t

    a 7o acce*t or re*udiate an inheritance c 7o enter into com*romise

    b 7o e..ect no/ation d 7o lease real *ro*erty .or one year

    ! . an agent enters into a contract in the name o. his *rinci*al, e9ceeding the sco*e o. his authority, the contract is

    a Ioidable b Enen.orceable c Rescissible d Ioid

    $ 1n day $, - a**ointed B as his agent co/ered by a general *ower to lease his car to J .or eight months

    1n day ", - a**ointed C as his agent co/ered by a s*ecial *ower to lease the same car .or two months

    1n day 0, - directly transacted business with J, leasing the car .or two months ?hich is correctH

    a 7he a**ointment o. B is /alid because it is co/ered by a general *ower

    b 7he a**ointment o. C is /alid because it is co/ered by s*ecial *owerc 7he a**ointments o. B and C are considered re/o8ed because the *rinci*al directly transacted with J

    d 7he a**ointment o. B is /alid because it is the earliest a**ointment

    $$ Not a .undamental obligation o. the agent

    a Sacri.ice his interest and gi/e it to the *rinci*al i. there is a con.lict

    b 7o render an accounting o. the transaction

    c Should not carry out the agency e/en i. that is the instruction, i. he 8new it would result in a loss or damage to the *rinci*al

    d Can be the borrower i. he is authorized to lend

     $" - a**ointed B as his agent to sell his car .or P"&, B sold the car to C .or P"&, but B acted in his own name -.ter

    deli/ery, C ins*ected the car and she .ound hidden de.ects in the car s -, as *rinci*al, liable to C e/en i. B acted in his own

    nameHa No, a**lying

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    Northern CPAR: Business Laws – Law on Agency

    $& Bears the ris8 o. collecting .rom the buyer the *rice o. the sale

    a Commission agent b Aelegacion c Ael Credere agent d (9*romission

    $2 t is a contract wherein a *erson binds himsel. to render some ser/ice in re*resentation or on behal. o. another, with the

    consent or authority o. the latter

    a -gency b Contract o. ser/ice c Contract o. *iece or wor8 d Partnershi*

    $% -gency can be ro/o8ed at will

    a ?hen a bilateral contract de*ends u*on it

    b . it is the means o. .ul.illing an obligation already contracted

    c . a *artner is a**ointed managing *artner in the articles o. *artnershi* and his remo/al is un>usti.iable

    d ?hen the *rinci*al directly manages the business entrusted to the agent

    $# Pedro truc8s cor*oration 3Pedro which is based in etro anila, sent a letter with a s*ecial *ower o. attorney to -lberto-hente 3-lberto , an agent dealing with truc8s in the latter6s o..ice in Cebu, a**ointing -lberto as the agent o. Pedro to sell itsnew truc8s 7he letter which was sent through LBC Courier Ser/ices, was duly recei/ed by -lberto -hente, who signed in thelogboo8 o. LBC -lberto, howe/er, did not res*ond to the letter Based on the .oregoing data:a -n agency was created between Pedro and -lberto by the im*lied acce*tance o. -lberto o. the agencyb No agency was created between Pedro and -lberto because -lberto did not res*ond to the letterc -n agency was created by the rati.ication o. -lberto when he duly recei/ed the letter with a s*ecial *ower o. attorneyd No agency was created because o. the inaction o. -lberto

    $! 7he .ollowing statements re.er either to authority or instruction gi/en by the *rinci*al to his agent Relates to the 8ind o. business or transaction u*on which the agent is commissioned to act Concerns the *rinci*al and the agent Re.ers to the mode o. action by the agent in carrying out the agencyI 7hird *ersons can re;uire the agent to *resent it to them since they are chargeable with 8nowledge thereo.

    Kou are to determine whether the abo/e statements *ertain to authority or instruction

    a and re.er to authority c and I re.er to instructionb and I re.er to authority d and I re.er to instruction

    " Petra, a singer based in Cebu, authorized -lma, also a singer, to go to anila to loo8 .or a nightclub where Petracould sing ?hen -lma arri/ed in anila, she *resented hersel., not Petra, as the singer, to the Raymond 7iger Bar whichengaged her ser/ices to sing nightly .or two months at the club Based on the .oregoing in.ormation, which o. the .ollowing

    statements is correctHa Petra has a right o. action against Raymond 7iger Barb Raymond 7iger Bar has a right o. action against Petrac 7he contract between -lma and Raymond 7iger Bar is a /alid contract between them, not between Petra and Raymond

    7iger Bard 7he contract between -llona and Raymond 7iger Bar is /oid because Petra was not the *arty thereto

    "$ Rad Bi8 Cars Cor*oration 3Rad Bi8, an authorized dealer o. P1NK cars a**ointed -rmando as its agent to sellthe cars o. the com*any 7he authority o. -rmando includes the gi/ing o. a discount o. P", to customers who *ay incash 1ne day, Carmina, a customer, went to the com*any6s car center and told -rmando that she wanted to buy a car with asales *rice o. P2, Dowe/er, as she only had P&&, , she told -rmando that she would ta8e the car i. -rmandoagreed to a discount o. P&, -rmando agreed and sold the car to Carmina at P&&, in behal. o. the cor*oration?hat is the status o. the sale made by -rmando to CarminaH

    a Ioidable at the instance o. Rad Bi8 because it did not gi/e its consent to the sale at the discount o. P&, b Enen.orceable against Rad Bi8, the *rinci*al, because -rmando acted beyond the sco*e o. his authority

    c Ioid because the additional discount o. P0, gi/en by -rmando was not authorized by Rad Bi8d Rescissible, because Rad Bi8 su..ered damage o. P0,

    "" Bal ga/e (scala a s*ecial *ower o. attorney wherein it was written that (scala was being authorized to sell thetwo cars o. Bal Dowe/er, Bal and (scala had an understanding that (scala should sell only one o. the cars (scala sold thetwo cars to Jeus who was not aware o. the instruction gi/en by Bal to (scalaa Bal is bound by the sale o. only one car in accordance with his understanding with (scalab Bal is bound by the sale o. the two cars because that is what is contained in the s*ecial *ower o. attorney as writtenc Bal is not bound at all by the sale o. either one or both o. the two cars because (scala /iolated the instructions gi/en by

    Bald Bal will be bound by the sale o. one or both cars at his o*tion

    "0 P ga/e a *ower o. attorney to - .or the sale o. his two cars, a 7oyota and a Lancer 7heir agreement includedamong other *ro/isions, the .ollowing: 3$ - shall be entitled to a commission o. $G based on the actual selling *rice o. thecars which P .i9ed at a minimum o. P4, .or the 7oyota and P&, .or the Lancer' 3"- need not render P anyaccounting o. his transactions as long as - turns o/er the actual selling *rice o. the cars net o. the commission o. $G - wasable to sell the 7oyota to Colorado .or P4$, , and the Lancer .or P&, to (scala who ga/e - a ti* o. P", -.ter the sale, P demanded .rom - an accounting o. the transactions that he had made but - re.used claiming that it

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    Northern CPAR: Business Laws – Law on Agency was enough that he turned o/er the net selling *rice o. P#$, 3P!, less $G o. P!, as commissionto P as agreed to by the two o. them Aecide:a -, need not render an accounting to P because that was their agreementb -, must account and deli/er to P only the sum o. P!, c -, must account and deli/er to P the sum o. *!$, d -, must account and deli/er to P P!0,

    "4 7he .ollowing statements re.er to either a commission agent or a bro8er De has a relation not only with his *rinci*al, and the buyers or sellers, but also with the *ro*erty which is the ob>ect o. the

    transaction aintains no relation with the thing he *urchases or sells 7he goods are *laced in his *ossession and dis*osalI De is merely an intermediary whose .unction is to bring the *arties to the transactionAetermine whether the abo/e statements *ertain to commission agent or bro8er

    a and *ertain to a commission agent c and *ertain to a bro8erb and I *ertain to a commission agent d and I *ertain to a bro8er

    "& 7he *rinci*al is not liable .or the e9*enses incurred by the agent in the .ollowing e9ce*t:a ?hen although the agent acted in contra/ention o. the *rinci*al6s instructions, the *rinci*al wishes to a/ail himsel. o. the

    bene.its deri/ed .rom the contractb ?hen it was sti*ulated that the agent would be allowed only to a certain sumc ?hen the agent incurred them 8nowing that an un.a/ourable result would ensue, i. the *rinci*al was not aware thereo.d ?hen the e9*enses were due to the .ault o. the agent

    "2 ?hen two *ersons contract with regard to the same immo/able thing, one o. them with the agent, and the other with the *rinci*al, and the contract are incom*atible with each other, ownershi* shall be trans.erred to:a 7he .irst *urchaser in good .aithb 7he .irst who com*leted the *ayment o. the *rice in good .aithc 7he .irst who will register in good .aith the transactiond 7he one who *resents the oldest title who must be in good .aith

    "% -n agency is im*liedly re/o8ed in three o. the .ollowing cases ?hich is the e9ce*tionHa ?hen a new agent is a**ointed .or the same business or transactionb ?hen the *rinci*al directly manages the business entrusted to the agent, dealing directly with third *ersonsc ?hen a s*ecial *ower o. attorney is granted to another agent *ertaining to a s*ecial matter in/ol/ed in a general *ower o.

    attorney issued to a *re/ious agent

    d ?hen the desire o. the *rinci*al is to hel* the agent manage the business

    "# Penelo*e a**ointed -licia as her agent to sell a set o. ba8ery e;ui*ment .or P&, with an ordinarycommission o. $G and a guarantee commission o. $&G -licia is authorized t o sell on credit -licia was able to sell, in behal.o. Penelo*e, the ba8ery e;ui*ment .or P&, to Nicole who issued a chec8 ten days a.ter the sale 1n the tenth day,howe/er, the chec8 was dishonoured by the ban8 because Nicole did not ha/e su..icient .unds .or ita -licia is liable to Penelo*e because she must bear the ris8 o. collecting the *rice .rom Nicoleb -licia is not liable to Penelo*e because the dishonor o. the chec8 was without -licia6s .aultc -licia is not liable to Penelo*e because she is not the *urchaser but Nicoled -licia is liable to Penelo*e because she acted beyond the sco*e o. his authority

    "! P a**ointed - as his agent 7he authority o. - did not authorize - to a**oint a substitute but it did not also *rohibithim .rom a**ointing one n this case:a - may a**oint a substitute because he is not *rohibited .rom doing so in his authority but he shall be liable .or the acts o.

    the substituteb - may not a**oint a substitute because there is no e9*ress *ro/ision in his a**ointment .rom P allowing him to a**oint

    onec - may a**oint a substitute but he shall be liable .or the acts o. the substitute only when the substitute is notoriously

    incom*etent o. insol/entd - may a**oint a substitute only when the substitute is designated in the authority gi/en by P to -

     

    0 7he .ollowing cases were *resented to you .or e/aluation: - bilateral contract de*ends u*on the agency 7he agency is a means o. .ul.illing an obligation *re/iously contracted 7he agency is one where the *artner was a**ointed manager in the contract o. *artnershi* and the remo/al o. the *artner

    .rom the management is un>usti.iablen which o. the abo/e cases is the *rinci*al not allowed to re/o8e the agencyH

    a and b and c and d , , and

    0$ 7he .ollowing are modes o. e9tinguishing an agency, e9ce*t:a Aeath, ci/il interdiction, insanity or insol/ency o. the *rinci*al agentb -ccom*lishment on the *ur*ose o. the agencyc (9*iration o. the *eriod .or which the agency was constitutedd Continued losses on the *art o. the *rinci*al or agent

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    Northern CPAR: Business Laws – Law on Agency0" R, S and 7, each one owning a se*arate lot, a**ointed - to sell their lots in one instrument Ender the agreement

    - will recei/e a commission o. $G o. the selling *rice o. each lot - was able to sell the lot o. R .or P$, ' the lot o. S.or P", ' and the lot o. 7 .or P0, Dow much commission may - collect .rom RHa P2, b P$, c P", d P0,

    00 7his is an agency that com*rises one or more s*eci.ic transactions o. the *rinci*ala S*ecial agency c -gency couched in general termsb @eneral agency d -gency couched in s*eci.ic terms

    04 P, owner o. a certain car, authorized - to sell the car .or P$, cash -, howe/er, sold the car in the name

    o. P .or P$$, but on credit B, the buyer 8new that at the time o. the transaction that -6s authority was to sell the car toP on cash basis 7he contract entered into by - is:a Ioid, because B was aware o. -6s limit o. authority n this case, - is not liable because he did not underta8e to get P6s

    rati.icationb Ialid, because the transaction, although, it was .or credit, was more ad/antageous to P -ccordingly, P will be liablec Enen.orceable against P because - acted in e9cess o. his authority 7hus, - alone will be liabled Rescissible, because P will su..er damage i. the sales *rice is not *aid by B

    0& P a**ointed - as commission agent to sell P6s goods .or P$, cash -, howe/er, sold the goods on credit.or P$$, without P6s consent Based on the .oregoing .act, which o. the .ollowing o*tions are a/ailable to PHI. P may demand immediate *ayment in P$$, cashII. P may demand immediate *ayment in P$, cash Dowe/er, - shall be entitled to 8ee* the e9cess o. P$,

     when he collects the *rice o. P$$,

    III. P may rati.y the sale on credit o. P$$, and wait .or the amount to be collecteda (ither or b (ither or c (ither or d only

    02 P leads B to belie/e that - is his 3P6s agent Dowe/er, - is not really the agent o. P Later, B transacted with -belie/ing that - is the agent o. P ?hat 8ind o. agency was created hereHa -gency by rati.ication c -gency by esto**elb -gency by a**ointment d -gency by necessity

    0% ?hen a sale o. a *iece o. land or any interest therein is through an agent, the authority o. the latter shall be in a *ublicinstrument, otherwise the sale shall be /oid-gency is *resumed to be without com*ensation unless there is *roo. to the contrary

    a both are true b both are .alse c only the .irst is true d only the second is true

    0# - s*ecial *ower to sell includes the *ower o. mortgage and a s*ecial *ower to mortgage includes the *ower to sellShould there be a sti*ulation that the agent shall ad/ance the necessary .unds, he shall be bound to do so e/en when the

    *rinci*al is insol/ent

    a both are true b both are .alse c only the .irst is true d only the second is true

    0! . the agent has been em*owered to borrow money he may himsel. be the lender at the current rate o. interest and i. hehas been authorized to lend money at interest, he can borrow it(/ery agent is bound to render an acount o. his transaction and to deli/er to the *rinci*al whate/er he may ha/e recei/ed by

    /irtue o. the agency e/en though it may not be owing to the *rinci*al

    a both are true b both are .alse c only the .irst is true d only the second is true

    4 7he res*onsibility o. two or more agents who ha/e been a**ointed simultaneously is solidary?hen two or more *rinci*als ha/e granted a *ower o. attorney .or a common transaction, any one o. them may re/o8e the

    same *ro/ided it is with the consent o. the others

    a both are true b both are .alse c only the .irst is true d only the second is true

    4$ 7he limits o. the agents authority shall be considered e9ceeded e/en i. it ha/e been *er.ormed in a manner moread/antageous to the *rinci*al than that s*eci.ied by him. the agent acts in his own name, he is directly bound as i. the transaction were his own and that the contract shall not be /alid

    between the *rinci*al and the third *arty

    a both are true b both are .alse c only the .irst is true d only the second is true

    4" n the e9ecution o. the agency, the agent shall obser/e the diligence o. a .ather o. a good .amilyn case a *erson declines an agency, he is bound to obser/e ordinary diligence in the custody and *reser/ation o. the goods

    .orwarded to him by the owner until the latter should a**oint an agent

    a both are true b both are .alse c only the .irst is true d only the second is true

    40 . the agent contracts in the name o. the *rinci*al e9ceeding the sco*e o. his authority and the *rinci*al does not rati.y thecontract, the contract shall be /oid i. the *arty with whom the agent contracted is aware o. the limits o. the *owers granted bythe *rinci*al- third *erson cannot set u* the .act that the agent has e9ceeded his *owers, i. the *rinci*al has rati.ied, or has signi.ied his

     willingness to rati.y the agents acts

    a both are true b both are .alse c only the .irst is true d only the second is true

    7

    Driven for real excellence!  BL b A. An"rix Do#in$o, CPA BL – 6th Batch – HQ04

  • 8/17/2019 Hq04 Agency

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    Northern CPAR: Business Laws – Law on Agency

    44 (/ery sti*ulation e9em*ting the agent .rom the obligation to render an accounting shall be /oid7he agent and the *rinci*al must be both ca*acitated

    a both are true b both are .alse c only the .irst is true d only the second is true

    ))))(nd o. Dandouts))))

    8

    Driven for real excellence!  BL b A. An"rix Do#in$o, CPA BL – 6th Batch – HQ04