The parties shall, when making a contract, have corresponding capacity for civil rights and civil conduct. A party may, in accordance with the law, entrust an agent to make a contract.
A contract that is entered into by an actor without the right of agency, in excess of the right of agency or beyond the expiration of the right of agency, in the name of a principal and without ratification by the principal, shall have no binding force on the principal, and the actor shall bear the responsibility therefor. The counterpart may urge the principal to give ratification of the contract within one month. Where the principal does not respond, the non-response shall be deemed a refusal of ratification. Pending the ratification, the bona fide counterpart has the right to rescind. The rescission shall be made by a notice.
Where an actor enters, without the right of agency, in excess of the right of agency or beyond the expiration of the right of agency, into a contract in the name of a principal, and where the counterpart has grounds to believe that the actor has the right of agency, the act of agency shall be deemed as effective.
Where a legal person, or the legal representative or the person in charge of an organization exceeds the limits of power in making a contract, the act of representation shall be effective unless the counterpart is aware or ought to be aware of the excess of the limit of power.
Where a person without the right of disposal disposes of another's property, upon ratification by the obligee or if the person without the right of disposal obtains the right of disposal after making the contract, the contract shall be effective.
Article 1.305 (ex art. 1.109) - Imputed Knowledge and Intention 56
If any person who with a party's assent was involved in making a contract, or who was entrusted with performance by a party or performed with its assent: 57
(a) knew or foresaw a fact, or ought to have known or foreseen it; or 58
(b) acted intentionally or with gross negligence, or not in accordance with good faith and fair dealing, 59this knowledge, foresight or behaviour is imputed to the party itself. 60
CHAPTER 3 - AUTHORITY OF AGENTS 145
Section 1 - General Provisions 146
Article 3.101 - Scope of the Chapter 147
(1) This Chapter governs the authority of an agent or other intermediary to bind its principal in relation to a contract with a third party. 148
(2) This Chapter does not govern an agent's authority bestowed by law or the authority of an agent appointed by a public or judicial authority. 149
(3) This Chapter does not govern the internal relationship between the agent or intermediary and its principal. 150
Article 3.102 - Categories of Representation 151
(1) 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. 152
(2) 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). 153
Section 2 - Direct Representation 154
Article 3.201 - Express, implied and apparent authority 155
(1) The principal's grant of authority to an agent to act in its name may be express or may be implied from the circumstances. 156
(2) The agent has authority to perform all acts necessary in the circumstances to achieve the purposes for which the authority was granted. 157
(3) 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.
Article 3.202 - Agent acting in exercise of his authority 159
Where an agent is acting within its authority as defined by article 3.201, its acts bind the principal and the third party directly to each other. The agent itself is not bound to the third party.
Article 3.203 - Unidentified Principal 161
If an agent enters into a contract in the name of a principal whose identity is to be revealed later, but fails to reveal that identity within a reasonable time after a request by the third party, the agent itself is bound by the contract. 162
Article 3.204 - Agent acting without or outside his authority 163
(1) Where 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. 164
(2) Failing ratification by the principal according to article 3.207, 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. 165
Article 3.205 - Conflict of Interests 166
(1) If a contract concluded by an agent involves the agent in a conflict of interest of which the third party knew or could not have been unaware, the principal may avoid the contract according to the provisions of articles 4.112 to 4.116. 167
(2) There is presumed to be a conflict of interest where: 168
(a) the agent also acted as agent for the third party; or 169
(b) the contract was with itself in its personal capacity. 170
(3) However, the principal may not avoid the contract: 171
(a) if it had consented to, or could not have been unaware of, the agent's so acting; or 172
(b) if the agent had disclosed the conflict of interest to it and it had not objected within a reasonable time. 173
Article 3.206 - Subagency 174
An agent has implied authority to appoint a subagent to carry out tasks which are not of a personal character and which it is not reasonable to expect the agent to carry out itself. The rules of this Section apply to the subagency; acts of the subagent which are within its and the agent's authority bind the principal and the third party directly to each other.
Article 3.207 - Ratification by Principal 176
(1) Where a person acting as an agent acts without authority or outside its authority, the principal may ratify the agent's acts. 177
(2) Upon ratification, the agent's acts are considered as having been authorised, without prejudice to the rights of other persons. 178
Article 3.208 - Third Party's Right with Respect to Confirmation of Authority 179
Where the statements or conduct of the principal gave the third party reason to believe that an act performed by the agent was authorised, but the third party is in doubt about the authorisation, it may send a written confirmation to the principal or request ratification from it. If the principal does not object or answer the request without delay,
the agent's act is treated as having been authorised. 180
Article 3.209 - Duration of Authority 181
(1) An agent's authority continues until the third party knows or ought to know that: 182
(a) the agent's authority has been brought to an end by the principal, the agent, or both; or
(b) the acts for which the authority had been granted have been completed, or the time for which it had been granted has expired; or 184
(c) the agent has become insolvent or, where a natural person, has died or become incapacitated; or 185
(d) the principal has become insolvent. 186
(2) The third party is considered to know that the agent's authority has been brought to an end under paragraph(1) (a) above if this has been communicated or publicised in the same manner in which the authority was originally communicated or publicised. 187
(3) However, the agent remains authorised for a reasonable time to perform those acts which are necessary to protect the interests of the principal or its successors 188
Section 3 - Indirect Representation 189
Article 3.301 - Intermediaries not acting in the name of a Principal 190
(1) Where an intermediary acts: 191
(a) on instructions and on behalf, but not in the name, of a principal, or 192
(b) on instructions from a principal but the third party does not know and has no reason to know this, 193 the intermediary and the third party are bound to each other. 194 (2) The principal and the third party are bound to each other only under the conditions set out in Articles 3.302 to 3.304. 195
Article 3.302 - Intermediary's Insolvency or Fundamental Non-performance to Principal 196
If the intermediary becomes insolvent, or if it commits a fundamental non-performance towards the principal, or if prior to the time for performance it is clear that there will be a fundamental non-performance:
(a) on the principal's demand, the intermediary shall communicate the name and address of the third party to the principal; and 198
(b) the principal may exercise against the third party the rights acquired on the principal's behalf by the intermediary, subject to any defences which the third party may set up against the intermediary. 199
Article 3.303 - Intermediary's Insolvency or Fundamental Non-performance to Third Party 200
If the intermediary becomes insolvent, or if it commits a fundamental non-performance towards the third party, or if prior to the time for performance it is clear that there will be a fundamental non-performance:
(a) on the third party's demand, the intermediary shall communicate the name and address of the principal to the third party; and 202
(b) the third party may exercise against the principal the rights which the third party has against the intermediary, subject to any defences which the intermediary may set up against the third party and those which the principal may set up against the intermediary. 203
Article 3.304 - Requirement of Notice 204
The rights under Articles 3.302 and 3.303 may be exercised only if notice of intention to exercise them is given to the intermediary and to the third party or principal, respectively. Upon receipt of the notice, the third party or the principal is no longer entitled to render performance to the intermediary.
Article 174. Consequences of Limitation of Powers to Conclude Transaction
If the powers of a person to conclude a transaction have been limited by a contract or the powers of an organ of a legal person by its constituent documents in comparison with those as determined in a power of attorney, in a law, or which may be considered obvious from the situation in which the transaction was concluded, and when concluding it such person or organ exceeded these limitations, the transaction may be deemed by a court to be invalid upon the suit of the person in whose interests the limitations were established only in instances when it can be proved that the other party to the transaction knew or knowingly should have been aware of the said limitations.
CHAPTER 10. REPRESENTATION. POWER OF ATTORNEY
Article 182. Representation
1. A transaction concluded by one person (representative) in the name of another person (person represented) by virtue of authority based on a power of attorney, specification of a law, or act of an empowered State agency or local self-government agency shall directly create, change, and terminate civil rights and duties of the person represented. A power also may be manifest from the situation in which a representative acts (retail seller, cashier, etc.).
2. Persons acting, although in the interests of others but in their own name (commercial intermediaries, trustees in bankruptcy, executors in a will, etc.). , as well as persons authorized to enter into negotiations concerning possible future transactions, shall not be representatives.
3. A representative may not conclude transactions in the name of the person represented with respect to himself personally. He also may not conclude such transactions with respect to another person whose representative he is simultaneously, except in the instances of commercial representation.
4. Concluding a transaction which by its character may be concluded only personally, and likewise other transactions specified in a law, shall not be permitted.
Article 183. Conclusion of Transaction by Unauthorized Person
1. In the absence of powers to act in the name of another person or in the event of exceeding such powers, a transaction shall be considered concluded in the name and in the interests of the person who concluded it unless the other person (person represented) subsequently approves expressly this transaction.
2. Subsequent approval of a transaction by the person represented shall create, change, and terminate civil rights and duties for him with regard to the particular transaction from the moment of its conclusion.
Article 184. Commercial Representation
1. A person who permanently and autonomously is representing in the name of entrepreneurs when they conclude contracts in the sphere of entrepreneurial activities shall be a commercial representative.
2. The simultaneous commercial representation of various parties in a transaction shall be permitted by consent of these parties also in other instances provided for by law. In doing the commercial representative shall be obliged to perform the commissions given to him with care of a normal entrepreneur. A commercial representative shall have the right to demand payment of stipulated remuneration and compensation for expenses incurred by him when performing a commission from the parties to the contract in equal shares unless otherwise provided by agreement between them.
3. A commercial representation shall be effectuated on the basis of a contract concluded in writing and stating the powers of the representative, and in the absence of such statement, also a power of attorney. A commercial representative shall be obliged to preserve the secrecy of the information made known to him concerning trade transactions also after the fulfillment of the commission given to him.
4. The particulars of commercial representation in individual spheres of entrepreneurial activity shall be established by a law and other legal acts.
Article 185. Power of attorney
1. A power of attorney shall be deemed to be a written authorization issued by one person to another person for representation to third persons. The written authorization to conclude a transaction by a representative may be granted by the person represented directly to the respective third person.
2. A power of attorney to conclude transactions requiring a notarial form must be notarially certified, except for the instances provided for by a law.
3. There shall be equated to notarially certified powers of attorney:
1) powers of attorney of military servicemen and other persons being treated in military hospitals, sanatoriums, and other military treatment institutions certified by the head of such institution, his deputy for medical affairs, and the senior or duty doctor;
2) powers of attorney of military servicemen, and in centers for the stationing of military units, formations, establishments, and military training institutions where there are no notarial offices or other agencies which perform notarial functions, also the powers of attorney of workers and employees, members of their families and members of the families of military servicemen certified by the commander (head) of this unit, formation, establishment, or institution;
3) powers of attorney of persons in places of confinement certified by the head of the respective place of confinement;
4) powers of attorney of legally capable citizens of full age who are in institutions for social protection of the populace which are certified by the administration of this institution or the director (or his deputy) of the respective agency of social protection of the populace.
4. A power of attorney to receive earnings and other payments connected with labor relations, to receive royalties of authors and inventors, pensions, grants and scholarships, deposits of citizens in banks, and to receive correspondence, including monetary and parcel, may also be certified by the organization in which the entruster works or studies, by the housing-operations organization at his place of residence, and by the administration of the inpatient treatment institution in which he is being treated.
A power of attorney for a representative of the citizen to receive the latter's deposit in the bank, sums of money from his bank account, correspondence addressed to him at post offices, as well as to effect in the citizen's name other transactions specified in paragraph one of this point, may be certified by the respective bank or post office. Such power of attorney shall be certified free of charge.
5. A power of attorney in the name of a legal person shall be issued signed by its director or other person authorized by the constituent documents to do so, with the seal of this organization affixed.
A power of attorney in the name of a legal person based on State or municipal property for the receipt of issuance of money and other property valuables must be also signed by the chief (senior) bookkeeper of this organization.
Article 186. Duration of Power of Attorney
1. The duration of a power of attorney may not exceed three years. If the period has not been specified in the power of attorney, it shall retain force for one year from the date of the issuance thereof. A power of attorney in which the date of its issuance has not been specified shall be null.
2. A power of attorney certified by a notary and intended for the fulfillment of operations abroad, without its duration specified, shall retain force until the revocation thereof by the person who has issued the power of attorney.
Article 187. Transfer of Power of Attorney
1. A person to whom a power of attorney was issued must personally perform the actions for which he is authorized. He may transfer the power of attorney to perform them to another person if authorized to do so by the power of attorney or forced to do so by virtue of circumstances in order to protect the interests of the person who issued the power of attorney.
2. The person who transferred the power of attorney to another person must notify the person who issued the power of attorney thereof and communicate to him necessary information about the transferee of the powers. The failure to perform this duty shall impose on the transfer of powers responsibility for the actions of the transferee as they were his own.
3. A power of attorney issued by way of transfer must be notarially certified except for the instances provided for by Article 185(4) of this Code.
4. The duration of a power of attorney issued by way of transfer may not exceed the duration of the power of attorney on the basis of which it was issued.
Article 188. Termination of Power of Attorney
1. The effect of a power of attorney shall terminate as a consequence of:
1) expiry of the duration of the power of attorney;
2) revocation of the power of attorney by the person who issued it;
3) renunciation by the person to whom the power of attorney was issued;
4) termination of the legal person in whose name the power of attorney was issued;
5) termination of the legal person to whom the power of attorney was issued;
6) death of the citizen who issued the power of attorney, deeming him to be legally incapable, partially capable, or missing;
7) death of the citizen to whom the power of attorney was issued, deeming him to be legally incapable, partially capable, or missing.
2. The person who issued the power of attorney may any time revoke the power of attorney or the transfer of the power of attorney, and the person to whom the power of attorney was issued, to renounce it. An agreement concerning the waiver of these rights shall be null.
3. The transfer of a power of attorney shall lose force with the termination of the power of attorney.
Article 189. Consequences of Termination of Power of Attorney
1. A person who issued a power of attorney and subsequently revoked it shall be obliged to notify the person to whom the power of attorney was issued about the revocation thereof, as well as third persons known to him and with respect to whom the power of attorney was issued for representation. The same duty shall be imposed on legal successors of the person who issued the power of attorney in instances of the termination thereof on the grounds provided for in Article 188(1), subpoints (4) and (6), of this Code.
2. The rights and duties which arose as a result of the actions of the person to whom the power of attorney was issued before this person knew or should have known about its termination shall remain in force for the person who issued the power of attorney and his legal successors with respect to third persons. This rule shall not apply if the third person knew or should have known that the validity of the power of attorney had terminated.
3. Upon the termination of a power of attorney the person to whom it was issued or his legal successors shall be obliged immediately to return the power of attorney.
Article 402. The Debtor's Responsibility for His Employees
Article 402. The Debtor's Responsibility for His EmployeesThe actions of the debtor's employees, involved in the discharge of his obligation, shall be regarded as those of the debtor himself. The debtor shall be answerable for these actions, if they have caused the non-discharge or an improper discharge of the obligation.