AGENCY IN NORDIC AND EUROPEAN LAW

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AGENCY IN NORDIC AND EUROPEAN LAW

• Dr juris Ellen Eftestøl-Wilhelmsson
• University of Oslo Scandinavian Institute of
  Maritime Law SIML
• University of Helsinki - KATTI

Faculty of Law
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WHAT IS AGENCY ALL ABOUT?

• One person is empowered to act on behalf of
  another
• Obvious practical utility
• Problems
• the characteristics which identify someone as an
  agent
• the limits of an agent's authority

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DIFFERENCIES IN VARIOUS LEGAL SYSTEMS

• The "inner" relationship
• Between the principal and his intermediary (can
  be handled locally)
• The outer relationship
• The intermediary's capacity to bind his principal
  (various solution)

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TWO GROUPS

• Continental
• German, Swiss,
• Austrian Netherlands law
• French law
• Scandinavian law
• Anglo-American
• English law
• US law

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THE CONTINENTAL SYSTEM

• Rather uniform, codified systems
• Based on a reasoned theory of the agent's
  representative powers
• Differences
• form requirements for contracting,
• prima facie rules of certain agents' power to
  represent their principals,
• agent's right to take over a contract for his own
  account,
• remuneration,
• conditions for terminating the agency,
• compensation on dismissal.

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THE ENGLISH AMERICAN COMMON LAW SYSTEM

• Based on original case law
• No coherent legal thinking
• Differ fundamentally in scope and basic structure

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SCOPE OF "AGENCY"

• England, an "agent" is anyone who has the power
  to act on another's behalf
• Nordic countries, an "agent" is an commercial
  representative who has a lasting relationship to
  his principal and in his relation to third
  persons acts in the principal's name. (in Germany
  usually "Handelsvertreter")

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POWER TO BIND THE PRINCIPAL ENGLISH LAW

• The agent's power is derived from the internal
  relationship
• Actual authority
• Implied authority
• Authority by ratification
• Apparent authority
• Undisclosed" principal

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POWER TO BIND THE PRINCIPAL - NORDIC LAW

• Starting point
• The inner relationship (as English law)
• The power to bind was tied to the mandate
• German scholars
• The agent's power distinguished from its mandate
  as two separate legal institutions

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THE NORDIC CONTRACTS ACTS

• Contracting through an agent
• An extension of the ordinary contracting rules
• The message to a third person is the basis of the
  agent's contracting powers
• If the agent exceeds the authority given him in
  the internal relationship, the principal still
  becomes bound by virtue of the message to the
  third party, if the third party is in good faith

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Contracting through an agent
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NO POWER TO BIND UNDISCLOSED PRINCIPAL

• The agent's power lies in the message to the
  third party
• The power presupposes that the third party knows
  that the agent is acting on the principal's
  behalf, and thus apparently "as agent".

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HOW CAN THE MESSAGE BE GIVEN TO THE THIRD PARTY?

• No form required
• No message
• Rather some form of sign
• Different possible signs

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A SIGNED DOCUMENT

• SHOWN TO THE THIRD PARTY
• NOT SHOWN TO THE THIRD PARTY
• NOT SHOWN BUT REFEERED TO

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THE PRINCIPAL HAS CONSIOUSLY PUT THE AGENT INTO
THE POSITION

• EMPLOYED
• GIVEN THE PRINCIPALS FORMS FOR CONTRACTING ETC

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ACCEPTED OR TOLERATED

• THE PRINCIPALS RECOGNITION OF CONTRACTS MADE
  WITHOUT FORMAL AUTHORITY
• (Toleransefullmakt)

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THE AGENTS OWN REPRESENTATION

• No sign is given to the third party
• Then the agent has the power to bind the
  principal only as far as he is actually
  authorized by the principal in their internal
  relation
• The principal may mend an insufficient imparting
  of powers

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LACK OF POWER

• No contract with the principal
• The agent will be liable in damages
• The damages cover only the loss arising through
  the lack of powers

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WHAT IF AN AGENT IS ACTING IN HIS OWN NAME?

• If the agent is acting in his own name
  ("commission agency"), the principal is taken to
  be undisclosed and is then not bound by contracts
  made by his agent.
• Two potential parties to the contract
• The third party acquires rights only against the
  agent
• The principal must compensate the agent for the
  liability which the agent undertakes
• Consequences in some insolvency situations.

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AN INTERNATIONAL PERSPECTIVE

• What are the trends in international
  harmonization of the rules on agency/representatio
  n?
• Different attempts
• Global UNIDROIT
• Regional - EU

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GLOBAL - THE UNIDROIT ATTEMPT

• What is UNIDROIT?
• The International Institute for the Unification
  of Private Law (Unidroit)
• An independent intergovernmental Organization
• Purpose to study needs and methods for
  modernizing, harmonizing and co-coordinating
  private and in particular commercial law as
  between States and groups of States.

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THE CONVENTION ON AGENCY IN INTERNATIONAL SALE OF
GOODS

• Convention on Agency in the International Sale of
  Goods (Geneva, 17 February 1983)
• Goal to establish common provisions concerning
  agency in the international sale of goods,
• Contribute to the removal of legal barriers in
  international trade and promote the development
  of international trade

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SPHERE OF APPLICATION AND GENERAL PROVISIONS

• The Convention applies where one person, the
  agent, has authority or purports to have
  authority on behalf of another person, the
  principal, to conclude a contract of sale of
  goods with a third party.
• It applies irrespective of whether the agent acts
  in his own name or in that of the principal.

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EUROPEThe regional harmonization process

• Soft Law
• PECL - Principles of European contract law
• DCFR Draft Common Frame of Reference
• Black letter law
• Commercial Agency directive

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PECL - AUTHORITY OF AGENTS

• Scope
• Governs the authority of an agent or other
  intermediary to bind its principal in relation to
  a contract with a third party.
• Does not govern an agent's authority bestowed by
  law or the authority of an agent appointed by a
  public or judicial authority.
• Does not govern the internal relationship between
  the agent or intermediary and its principal.

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PECL - Categories of Representation

• Directe representation
• Where an agent acts in the name of a principal,
  the rules on direct representation apply (Section
  2). It is irrelevant whether the principal's
  identity is revealed at the time the agent acts
  or is to be revealed later.
• Indirecte representation
• Where an intermediary acts on instructions and on
  behalf of, but not in the name of, a principal,
  or where the third party neither knows nor has
  reason to know that the intermediary acts as an
  agent, the rules on indirect representation apply
  (Section 3).

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PECL GRANT OF AUTHORITY

• The principal's grant of authority to an agent to
  act in its name may be express or may be implied
  from the circumstances.
• The agent has authority to perform all acts
  necessary in the circumstances to achieve the
  purposes for which the authority was granted.
• A person is to be treated as having granted
  authority to an apparent agent if the person's
  statements or conduct induce the third party
  reasonably and in good faith to believe that the
  apparent agent has been granted authority for the
  act performed by it.

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PECL AGENT IS ACTING WITHIN ITS AUTHORITY

• Where an agent is acting within its authority
• Its acts bind the principal and the third party
  directly to each other.
• The agent itself is not bound to the third
  party.

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PECL ACTING OUTSIDE THE AUTHORITY

• Agent acting without or outside his
  authorityWhere a person acting as an agent acts
  without authority or outside the scope of its
  authority, its acts are not binding upon the
  principal and the third party.
• The principal is not ratifying lack of authority
• The agent is liable to pay the third party such
  damages as will place the third party in the same
  position as if the agent had acted with
  authority. This does not apply if the third party
  knew or could not have been unaware of the
  agent's lack of authority.

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PECL - Indirect Representation

• Intermediaries not acting in the name of a
  Principal
• Where an intermediary acts
• (a) on instructions and on behalf, but not in the
  name, of a principal, or
• (b) on instructions from a principal but the
  third party does not know and has no reason to
  know this,
• the intermediary and the third party are bound to
  each other.
• (2) The principal and the third party are bound
  to each other only in certain situations of
  insolvency or fundamental breach of contract

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PECL Nordic law

• Same system of authority and mandate
• Not possible to bind undisclocsed principal
• PECL acting outside of authority will not bind
  the principal
• Nordic law acting outside the authority might
  bind the principal if the third party was in good
  faith

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DCFR

• Draft common Frame of Reference
• Prepared by the study Group on a European Civil
  Code
• And the
• Research Group on EC Private Law (Acquis Group)
• Contains Principles, Definitions and Model Rules
• Purpose Provide material for a possible
  political Common Frame of Reference (CFR)
• Agency Chapter 6 on Representation

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European black letter law

• COUNCIL DIRECTIVE of 18 December 1986 on the
  coordination of the laws of the Member State
  relating to self-employed commercial agents
  (86/653/EEC)
• The commercial agency directive

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Scope of the directive

• Article 1
• 1. The harmonization measures prescribed by this
  Directive shall apply to the laws, regulations
  and administrative provisions of the Member
  States governing the relations between commercial
  agents and their principals

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A Commercial agent

• For the purposes of this Directive, 'commercial
  agent' shall mean a self-employed intermediary
  who has continuing authority to negotiate the
  sale or the purchase of goods on behalf of
  another person, hereinafter called the
  'principal', or to negotiate and conclude such
  transactions on behalf of and in the name of that
  principal.

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A Commercial agent is NOT

• 3. A commercial agent shall be understood within
  the meaning of this Directive as not including in
  particular
• - a person who, in his capacity as an officer, is
  empowered to enter into commitments binding on a
  company or association,
• - a partner who is lawfully authorized to enter
  into commitments binding on his partners,
• - a receiver, a receiver and manager, a
  liquidator or a trustee in bankruptcy.

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What does the directive regulate?

• The inner relation between the parties
• CHAPTER I Scope
• CHAPTER II Rights and obligations
• CHAPTER III Remuneration
• CHAPTER IV Conclusion and termination of the
  agency contract
• CHAPTER V General and final provisions