Law of Agency

For Law Students

By: Geta Belete Shiferaw

 Introduction to Agency
 According to Article 1 of the Ethiopian Civil Code, a human person is a subject of rights and duties
from birth to death, and one of the attributes of personality is the ability to exercise those rights and
duties.
 ያለባለቤቱ አይነድም እሳቱ is a proverb indicates that a person is the best manager of their own affairs.
However, there are various reasons why one may not perform tasks on their own.
 Agency is the legal relationship in which one person, the agent, represents another, the principal,
allowing the agent to affect the principal's legal standing with third parties through contracts or
property transactions.
 The law of agency regulates the relationships among agents, principals, and third parties, outlining
how individuals or entities can interact through intermediaries.
 An agent (ተወካይ)- is an individual or a physical person authorized to act on behalf of another person
(the principal)
 Principal ( ወካይ)- A principal is a person, natural or legal, who gives power to another person, the
agent, so that the latter acts on behalf of him/it.
 Third parties- are individuals with whom the agent has contracted, and the agent is authorized to act
 The Need for Agency
1. It helps to overcome lack of business knowledge or experience- Hiring a professional allows
someone to accomplish tasks they lack the necessary knowledge or experience to handle on their own.
Example, Special agents (commission and forwarding agents) – see article 2234, 2251
አንድ ባለጉዳይ ፍ/ቤት መቅረብ የማይፈቅድ ከሆነ ነገሩን ለማስረዳት፣ለመከራከር፣ለሚጠይቀው ሁሉ በቂ መልስ ለመስጠት የሚችል ሰው
በዋናው ባለጉዳይ ተተክቶ በነገረፈጅነት፣በወኪልነት፣በጠበቃነት መከራከር ይችላል፡፡ የፍ/ሥ/ሥ/ሕግ አንቀጥ 57
2. It helps to overcome the pitfalls of incapacity- For various reasons the law has precluded some
groups of persons from personally exercising their rights and duties. These groups of persons can be
capable of safely exercising their rights and duties (take care of their interests) via means of representation
by other capable individuals.
3. The very nature of artificial persons- By their nature, artificial persons must be represented by natural persons
who act on their behalf and interact with third parties. For example, the founders, managers, directors, and
secretaries of business organizations are natural persons authorized to represent them.
4. It helps to overcome physical inconvenience- For instance, when shareholders are called for a meeting, it can
be challenging to accommodate everyone, especially if the number of shareholders is large. In such cases,
shareholders may delegate authority to other shareholders to represent them at the meeting.
 Cont.
Which Acts cannot be performed by an agent?
1. Marriage-
 Prospective spouses are not allowed to delegate some one to conclude marriage on behalf of him her.
Article 12 (1) of Revised Family Code
 Yet, exceptionally, the Ministry of Justice may allow marriage through representation when the
Minister believes that there is a serious cause for doing this and if the marrying spouse gives his/her
consent for the representation. Article 12 (2)
 Article 12 (2) does not define what really constitutes a serious cause in this matter. Whether a certain
cause is serious enough to allow marriage by representation is left to the judgment of the Ministry of
Justice.
በውክልና የጋብቻ ፍቺ ጥያቄን ማቅርብ ይቻላል?- በመርህ ደረጃ ጋብቻ በፍቺ እንዲፈርስ መጠየቅ የሚገባው
ከባልና ከሚስት አንደኛው ተጋቢ ወይም ሁለቱም በስምምነት ቢሆንም በህግ አግባብ ተቀባይነት ያለው ውክልና
ማስረጃ በያዘ ሰው የሚቀርብ የፍቺ ጥያቄ ተቀባይነት አለው፡፡ ሰበር (ቅፅ 23 ሰ/መ/ቁ 150408)
 Cont.
2. Will
 An act of a will is strictly personal- it can neither be made nor be entrusted to be determined to be
made by third party. Articles 857& 2199
 The testator alone has the right and authority to decide the contents and distribution of their estate
through the will.
 A person cannot entrust a third party with the task of determining how their succession (i.e., the
devolution of their estate) is to take place.
 ኑዛዜ ጥብቅ የሆነ፣ የግል ጠባይ ያለው እና በሟች ብቻ የሚፈፀም በመሆኑ ብዙ ሰዎችን አንድ በሆነ ፅሁፍ በጋራ ማናዘዝ
የማይቻል እና ኑዛዜውን ፈራሽ የሚያደርግ ስለመሆኑ (134836, volume 22)
3. Donation- Article 2434
 A donation is an act purely personal to the donor. Article 2434 (1)
 However, if the donee and the property to be donated are specified, donation can be made by an
agent who is so authorized. Article 2434 (2)
 Sources of Agency- Article 2179
 From where does the agent derive his authority?- the agent drives his power from contract or law Article
2179
 Unless the law does specifically grant such authority, or unless authority is conferred on the agent by a
contract with the principal, there can be no lawful and binding exercise of authority by one person on behalf
of another.
What is the limitation of this article? Are contract and law the only sources of agency under the Ethiopian law?
1. Agency by Operation Law
 The authority to act on behalf of another may result from operation of law. በህግ
የሚገኝ የውክልና ስልጣን
ወካይ ለተወካይ በፍቃዱ የሚሰጠው ሳይሆን የወካዩ ፍቃድ እና ፍላጎት በህግ ድንጋጌ መሰረት የሚዳኝበት የውክልና አይነት ነው፡፡
 The followings are instances where agency is created by the operation law:
1. Agents appointed for Minors
o Article 380(1) of the civil code provides that the tutor shall represent the minor in all civil maters.
o The minor shall be represented by his tutor concerning his property interest. Article 269 of the federal revised family code
 Cont.
o Any juridical act performed by the tutor, on behalf of the minor, shall be binding on the minor as
though he had performed them himself being a major. Article 305 of the federal revised family code
o Acts performed by the tutor in violation of legal provisions shall be subject to the provisions of the
Title of the Civil Code relating to Agency in the case in which a representative has exceeded his
powers. Article 306 of the Federal Revised Family Code
 Under Article 204 of the Ethiopian Civil Code, parents are granted the authority to represent their
minor child or children.
 Both the father and mother are jointly considered the tutors of their child who are legally
authorized to represent a minor regarding property management. Article 199(2).
 As per article 305 of the revised family code, actions taken by a tutor on behalf of a minor will be
binding on the minor as if they had performed those actions themselves as an adult.
 Cont.
2. Cases of Unauthorized Agency – Articles 2257 –2265
 Unauthorized agency refers to an emergency power granted by law, allowing someone to act on
behalf of a principal who has certain manageable interests but is unable to manage them. In this
situation, another person (unauthorized agent) may step in to perform these activities without
proper authorization. Article 2257
Conditions to be met for unauthorized agency to have the legal effect of agency
o The management should not be carried out against the principal’s will. Article 2258 (1)
o The acting person should act on behalf of the principal ( must not pursue their own interests. Article
2259 (1)
o The acting person must immediately inform the principal that he has undertook the management of
the principal's affairs without authorization. Article 2260 (1)
o The acting person should manage the affair as the same care as bonus paterfamilias (diligence is
required on the part of the acting person) Article 2261
o The acting person should act with strict good faith. Article 2263
 Cont.
Note: When the above conditions are met, the principal is obligated to ratify the actions taken. Article
2264
What is the effect of ratification?- When the principal is legally required to ratify a transaction or
actually does so, the provisions related to agency (specifically Articles 2179 to 2198), will apply.
Article 2265
3. Business Organizations
o The manager of general partnership shall have the power to carry out, in the name of the
partnership, all lawful acts in order to achieve the business purpose of the firm. Article 199 of the
new commercial code
4. Agency from Decisions of the Court ( Articles 2253-2256)
 According to article 2255, curator is appointed by courts to perform acts of urgent nature on
behalf of another, where the person to be represented is for some reason or another unable to
appoint a representative because he is away, or ill or for any other reason.
 Cont.
በፍ/ቤት የሚሰጥ የውክልና ስልጣን አንድ የተወሰነ ስራን ወይም የተመደቡ ስራዎችን በሌላ ሰው ስም ሆኖ
እንዲያከናውን ዳኞች ጠባቂ ባለአደራ ለተባለው ሰው ውክልና የሚሰጡበት የውክልና ስልጣን አይነት ነው፡፡
Can we say that, strictly speaking, it is the third type of authority granted by judicial decision?
Two lines of argument:
1. It is the third types of agency relationship- why?
 The person being represented is not required to give consent (Articles 2256/1)). It is the court that
appoints the agent based on conditions specified in the parties' application ( Article 2254), and it is
the court's responsibility to ascertain these elements.
 Article 2256(2) refers to the application of Chapter 2 provisions (agency sourced from contract) in
cases of agency that arise from judicial decisions presuppose that this is the third types of agency
relationship.
2. It is categorized under “agency by law”, not the third types of agency relationship
Since Article 2179 specifies the two possible sources of agency, Articles 2253 and the following
provisions can be considered as agency emanating from law. It is, in fact, the law that defines the
relationship.
 Cont.
Therefore, the authority provided under articles 2253- 2256 can be considered as raised from the law.
Generally, from articles 2252 to 2256 one can understand that:
 Only the relatives or spouse of the individual to be represented can apply for the appointment of a curator.
However, the appointed agent or curator is not limited to being a relative or spouse; the court can appoint
anyone for whom the relatives or spouse have applied.
 The court appoints a curator when the represented person cannot appoint an agent due to absence, illness, or
other reasons, ensuring the curator handles urgent matters in the best interest of the individual while managing
any associated liabilities.
 The power of the curator is determined by the court but should be of an urgent nature (Article 2255(2)).
 To protect the interest of the person represented, the court ought to make arrangements to ensure that the
curator will execute any sentence that may be passed upon him or her (Article 2255(3)). One such measure
might involve requiring the curator to produce sufficient securities
በአጠቃላይ ሥራው የሚሠራለት ሰው ሥራውን በራሱ ለመሥራትም ሆነ ሌላው ሰው ሥራውን እንዲሠራለት ለመሾም
በማያስችለው ሁኔታ ውስጥ ሲገኝ ዳኞች ሌላውን ሰው ሥራውን ስለ ንብረቱ ባለቤት ሆኖ እንዲያከናውን ሥልጣን
ሊሰጥ ይችላሉ፡፡ በዚህ ሁኔታ በዳኞች የሚወከለው ጠባቂ ባለአደራ (curator) የሚያከናውናቸው ተግባራት አስቸኳይ እና
ጊዜ የማይሰጡ ጉዳዮችን ብቻ መሆን አለበት፡፡ ምክንያቱም ጠባቂ ባለአደራው የሚሾመው ሥራው የሚሠራለትን ሰው
ጥቅም ከማስጠበቅ አንጻር በመሆኑ ወካዩ ላይ ሊደርስ የሚችለውን ጉዳት ለማስወገድ ነው፡፡
 Cont.
In addition what is provided under articles 2253-2256, there are instances where an agent is appointed
courts for the well being the stated person.
o Where a minor or an interdicted person is the liquidator of a succession, he shall be represented by
his tutor for the performance of the functions of liquidator. Article 949 of the civil code
o The court shall appoint a liquidator, on the application of any interested person and the authority
may be prescribed by regulations. Article 950
o The court may, on the application of any interested person, appoint a notary or some other person
to replace the liquidator. Article 951
 Agency by Contract

 The contract of agency is a special contract. As such, the provisions of general contract law still apply
in areas not specifically regulated under the law of agency. Therefore, the validity requirements for
contract formation under the general contract provisions (Article 1678) should be consulted.
Should the principal be capable ?
 A principal can only delegate transactions that he is capable of performing himself. He cannot extend
his legal capacity by acting through an agent. Therefore, a minor can appoint an agent only for
specific acts that he is legally allowed to perform personally.
 Since the authorized acts of the agent are considered acts of the principal (Article 2180(1)), and
contracts must be entered into by capable persons (Article 1678(a)), only a capable person can serve
as a principal in a contract.
 Cont.
Should the Agent possess a legal Capacity?
o No one can do through another what he cannot do himself.

o As per Article 2230& 2182 (1) of the civil code, unless there is otherwise agreement, incapacity of the agent is
one of the grounds for the extiniction of the contract of agency.
o Accordingly, a principal can not appoint a minor to be his agent even the law of agency itself
stipulates that incapacity terminates the agency relationship.
Does the above argument apply for minors?- Can a principal appoint a minor agent?- The issue is
contentious.
What is the effect of agency contract concluded with agents who lacks a legal capacity?
 According to Article 1808(1), only the party claiming invalidation on the ground of incapacity.
Example, if the minor does not assert invalidation within two years after the grounds for it disappear,
the contract remains valid.
My view: In the law of agency, there is generally no prohibition against a minor acting as either an
agent. Thus, it is up to the individual minor to decide to act as an agent. Once the principal forms a
contract of agency with the minor, the contract remains valid until the minor seeks to invalidate it.
 Cont.
Consent of the Agent and the Principal
o The agent and the principal to the contract of agency should give consent which is sustainable at law
being free from vices of consent such as, mistake, fraud, duress. Articles 1678 (a) &1679
Consent of Agent to the Internal Contract - Articles 2201& 1682
o Agency is concluded when one the agent accepts an offer made by the principal).
o What is the effects of silence of the agent when an offer is made by a principal?-In the general
contract, silence does not amount to acceptance. Article 1682
 Cont.
In principle, silence does not amount to acceptance. However, article 2201(2) provides an exception.
Thus, under the following three circumstances, the silence of the agent when an offer is made to him
amounts to acceptance.
1. Where the agent carries out the function of representation in an official capacity- The exact nature of
such circumstances is not apparent from the text but it might refer to cases such as when a public
agency is established to render such services to the public.
2. Where the agent is rendering the representative functions professionally- There are a number of
professional agents rendering representative services in various areas.
Examples, Commission agents (Article 2235/3), forwarding agents (2251/2), Del credere agent (
2241) and Attorneys
3. Where the agent ‘holds himself out publicly for such functions- where an offer is made when an
intending principal has communicated his or her intention to the advertiser, who is free to accept or
reject the offer. However, failure to reject the offer immediately amounts to acceptance.
 Cont.
Consent of the Agent to the External Contract- the contract between the agent and the 3rd party
o Consent is an element of all valid contracts including agency contract. Although the principal is
deemed to contract, it is the agent who actually deals with the third party, and if the agent has not
consented to the arrangement with the third party if he has been coerced to contract,
o Where the agent is mistaken, defrauded or subjected to duress, the principal has the right to avail these as a
defense against third party to invalidate the contract. Article 2189 (2)
o Article 2189 (3) provides that if the agent commits any fraud in his dealings with the third party the
latter can treat it as the principal’s fraud, and thus can cancel the contract. This is because the
contractual relationship between the principal and the third party relies on effective communication
via the agent. If the agent commits fraud against the third party, that communication is impaired.
Why is only fraud committed by the agent against the third party mentioned as a defense under Article
2189(3)? What if the third party mistaken or coerced by the agent?
 Cont.
Form of the Agency Contract- Article 2200 +2180
 In principle, no formalities are required to establish an agency relationship. Thus, the principal and
agent can to agree in any form. Agency can be made either expressly or impliedly. Article 2200 (1)
 However, the agency contract must adhere to a prescribed form when the agent is appointed for an
act that the law mandates to be in a specific format. Article 2200 (2) ተወካዩ ከተወከለ በኋላ
ሊያከናውናቸው የሚችላቸው ጉዳዬች ወይም የሚዋዋላቸው ውሎች በፅሁፍ መሆን ግድ የሚላቸው
አይነት ከሆኑ ከወዲሁ የሚደረገው የውክልና ውልም በፅሁፍ መሆን አለበት ነው::For instance, if one is
appointed to sell a house, the appointment must be in writing, as the sale of immovable property
requires a written contract under the Article 1723 of the Civil Code
 Article 2180 provides, ‘where the law requires that a contract be made in a prescribed form, the authority to
enter into such contract on behalf of another shall be given in the same form’.
 In this regard, the federal supreme court cassation bench ruled that “የውክልና ስልጣን መስጫ ሰነድ በህግ
ስልጣን በተሰጠው አካል ቀርቦ ካልተረጋገጠና ካልተመዘገበ በስተቀር ህጋዊ ውጤት አይኖረውም፡፡ (Volume 12, File
Number 59568)
 Scope of agent’s authority
 Where the law is the source of agency, determining the limits of an agent's powers is relatively
straightforward, as the law often provides these limits. At times, this may require interpreting the
law.
 However, challenges arise when the source of agency is a contract. Problems can occur when the
agency relationship is not explicitly written or oral but is instead implied by surrounding
circumstances. Even if the contract is express, the scope of agency may not be clearly defined
within the contract itself.
 Cont.
Article 2181 states three rules regarding powers of attorney.
1. Looking the terms of the contract the agency- የውክልና ስልጣን ወሰኑ በውሉ ይዘት ላይ በሰፈረው ልክ ነው፡፡
o The limit of the agent’s authority is defined by the terms of the contract creating that authority. article 2181
(1)
o The power of attorney should exactly conform to the contract of agency, oral or written, regarding the
scope of power of the agent.
o If the agent attempts to exceed this limit, his action will not bind the principal, unless by virtue of law.
o Example, if the power of attorney permits the agent to purchase a car, and he tries to .purchase a boat, the
principal will not be bound by his act.
2. Where the agent informs a third party of his power of attorney, the third party is bound with the principal
only to the extent of that information.
 What would happen if the power of attorney provides that the agent has certain powers that are not
originally agreed in the contract of agency? – Article 2181 (2)
 Whenever the content of the power of attorney does not exactly conform to the contract of agency, it is the
power of attorney that should be taken into account in determining whether the agent has acted within his
scope of power.
 This is on the condition that the third party has entered into the contract relying on the power of attorney.
 Cont.
Note (ማስገንዘቢያ): The English and Amharic versions of Article 2181(2) indicate that an agent's authority concerning a
third party is determined by what the agent communicates to that third party. In contrast, the French version ( the original
document from where the English and Amharic version is taken) refers to “the person represented” (the principal), which
significantly alters the meaning. The English and Amharic interpretations appear to grant the agent considerable leeway at the
principal's expense and require minimal diligence from third parties. Given the substantial difference in meaning, and since
the Amharic version is official, addressing this issue would require amending the Civil Code to reflect the original intent of
the drafters. Alternatively, courts could adopt the principle that the French version can be used to interpret ambiguous
Amharic provisions, even when the language is clear.
3. Narrow Interpretation of power of agency- Article 2181 (3)
 The scope of an agent’s authorization under a power of attorney' will be narrowly interpreted.
 The agent’s authority will extend only to what is clearly mentioned in the agreement.
 For example, if the agreement allows the agent to- purchase twenty cans of black paint for the
principal, the agent cannot bind- the principal to pay for varnish or brown paint, or gray paint; or
twenty-one cans.
 Cont.
 Article 2202(1) provides, ‘where the scope of the agency is not expressly fixed in the contract, such scope shall be
fixed according to the nature of the transaction to which it relates’.
 Although the contract does not expressly provide any power, the agent might still possess implied
powers. In this regard, article 1713 provides that “parties are bound by the terms not only expressed
in the contract but also implied from custom, good faith, and the nature of the transaction.”
Article 2181(3) requires a strict interpretation of agency authority, while Article 2202(1) allows for
implied authority based on the nature of the transaction. Is there a conflict between these two provisions?
 General Vs Special Agency.
 Normally, it is up to the agent and principal to determine the agent's scope of authority. However,
the law recognizes two types of agency: general agency and special agency. ምንም እንኳን የወካዩን የስልጣን
ወሰን ወካይ እና ተወካይ በውላቸው የሚወስኑት ቢሆንም ጠቅላላ እና ልዩ ውክልና ተብለው የተከፈሉ የስልጣን ወሰኖች
በፍትሐ-ብሔር ህጉ ከቁጥር 2203 እስከ 2206 ድረስ ተዘርዝረው ይገኛሉ፡፡
General Agency- Articles 2202 (2), 2203&2204

As per article 2202 (2), the agency is said to be general for all the affairs of the principal
Is it possible to grant an agent the authority to handle all the affairs of the principal that an agent is
capable of performing?
 Cont.
 A general agency allows the agent to engage in activities strictly related to the management
of affairs. Consequently, the agent possess limited authority and cannot dispose of the rights
of the person they represent. ጠቅላላ ውክልና ማለት በጠቅላላ አነጋገር የሚደረግ የውክልና አይነት ሲሆን ተወካይ
የአስተዳደር ስራዎችን ብቻ ለመስራት የሚያስችለው ነው፡፡ የአስተዳደር ስራዎች የሚባሉትም፤ የወካዩን ሀብት
ማስቀመጥ/መጠበቅ፣ ከ3 አመት ለማያልፍ ዘመን ማከራየት፣ በብድር የተሰጠውን ሀብት የመሰብሰብ፣ ከሀብቱ የሚገኘውን ገቢ
ተቀብሎ የማስቀመጥ፣ ለተከፈለ እዳ ደረሰኝ የመስጠት፣ ሰብሎችን መሸጥ፣ ለሽያጭ የተመደቡ የንግድ እቃዎችን ወይም
ይበላሻሉ ተብለው የሚታሰቡ ነገሮችን መሸጥ ናቸው፡፡
 Cont.
Special Agency- Articles 2205&2206

 This type of agency allows the agent to conduct only the affairs specified in the agreement, along
with their natural consequences, as outlined in Article 2206(1).
 Cont.
What actions are deemed the natural consequences of a special agency?
What does a particular affair or certain affairs only refer to in Article 2202(2) of the Civil Code?
 It does mean that the actions to be carried out by the special agent must be clearly defined, ensuring that both
the agent and the principal have previously agreed on which actions will be performed.
 In a special agency, the actions the agent is expected to perform are clearly defined, such as the sale of a house
or the leasing of land.
 Unlike a general agency, it typically does not involve ongoing services. For instance, an agent tasked with
delivering a truck to a third party is considered a special agent.
 አንድ ተወካይ ልዩ የውክልና ሥልጣን ከሌለው በስተቀር ሊፈጽማቸው የማይችላቸው ተግባራቶች በፍ/ብ/ህ/ቁ 2205(2) ስር
ተዘርዝረዋል። እነሱም፡- የማይንቀሳቀሱ ንብረቶችን መሸጥ ወይም አሲዞ መበደር፣ ካፒታሎችን በአንድ ማህበር ውስጥ
ማስገባት፣የሀዋላ ሰነዶችን መፈረም (sign bill of exchange)፣ መታረቅ፣ ለመታረቅ ውል መግባት፣ስጦታ ማድረግ ወይም
በአንድ ጉዳይ በፍርድ ቤት ቀርቦ መከራከር ናቸው።
Are the affairs requiring special authority, as outlined in Article 2205(2), exhaustive?- As per article 2205 (1),
where an agent is called up on to perform acts other than acts of management,, special authority is required. This
legal provision suggests that the acts listed in under sub article 2 of the same article are merely illustrative.
Therefore, not only the specified acts but also similar acts of disposition outside of management require the agent
to have special authority.
 Cont.
Why did the legislator focus solely on bills of exchange? What about other commercial instruments ( like cheque and
promissory note) mentioned in Article 732 of the old Commercial Code?
Why is a special agency needed for investing capital, but not for investing income?
What is the effect of failure to mention articles ( legal provisions) in giving special agency?- The federal
supreme court cassation bench ruled that “በውክልና ሰነድ ላይ ለተወካይ የተሰጠው ስልጣን በይዘቱ ልዩ ውክልና የሚያመለክት
ሆኖ ሰነዱ ስለ ልዩ ውልክና የሚያትተውን የፍ/ብ/ህ/ቁ 2205 ያለመጥቀሱ ብቻ ለተወካዩ ልዩ የውክልና ስልጣን እንዳልተሰጠ
አያስቆጥርም፡፡
 Modes of Representation and the Effect towards Third party
1. Complete/ Disclosed Agency – Article 2189

 Article 2189(1), provides, ‘contracts made by an agent in the name of another within the scope of his
power shall be deemed to have been made directly by the principal’.
 The agent is not a party to such a contract. As a result, the agent is not liable to either the third party
(for the default of the principal) or to the principal (for the default of the third party).
 The principal can request the invalidation of a contract entered into by the agent with the third party
on the ground that the consent of the agent was defective (Article 2189(2)).
 The principal cannot invoke the incapacity of the agent, where such incapacity occurred before the
formation of the contract of agency. On the other hand, if the incapacity occurred after the formation
of the contract of agency, it results in the termination of the agency (Article 2230).
 Cont.
2. Undisclosed agency/ Indirect Representation- Articles 2197&2198

 Here, the agents who deal with third parties in their own names, and not in the name of their principal.
 If the third party does not know who the principal is, the principal is said to be “undisclosed,” even though
the third party may know that the agent is acting on behalf of someone else.
 An undisclosed principal is not liable on the contract. The agent and the third party are held to have
contracted together, and the agent rather than his principal is bound by the contract. Article 2197(1).
 The third party therefore cannot sue the principal directly on the contract. However, he can sue the agent,
and through the agent he can in effect indirectly sue the principal. Article 2197 (2)
 Cont.
Note ( ማስገንዘቢያ):
1. The English version of Article 2197 speaks of an agent “acting oh his own behalf ”. The French and
Amharic accounts speaks of an agent acting “in his own name” ( በራሱ በተወካዩ ስም). The distinction is
important, since an agent can act on behalf of another but still in his, own name (for example, a
commission agent, Article 2234). The essence of representation, as embodied in Article 2189, is
that an agent acts-in the name of another; Article.2197 is clearly intended toc over the opposite
situation; that is, when an. agent-acts in his-own name. If it did not, there-would be no provisions
covering the circumstance where an agent-acts in his own name. The Situation where an agent acts
in the name, of another, but in his own behalf, is covered essentially by Articles 2187 and 2188.
For these reasons, the Amharic and French versions are the only ones reasonable, and the English
should be read accordingly.
2. A similar language problem-exists in Article 2196(2) there the English translation speaks of the act
the agent did “in behalf of another.” The French and Amharic speak of an act “in-the name of-
another ( በሌላ ሰው ስም). Here, the English text should be reviewed to ensure it aligns with the
Amharic and French versions.
 Cont.
 As per Article 2197(2), a third party may exercise against an undisclosed principal rights which the
agent has against that principal.
 Among the agent’s rights against the principal is the right given by Article 2222 to compensation
for liabilities incurred by the agent on the principal’s behalf. Since his liability as agent for an
undisclosed principal was incurred on behalf of the principal, the principal is liable for this same
liability to the agent and, through Article2197(2), the third party has an effective remedy even
against an undisclosed principal.
For example, if an agent enters into a contract with a third party in their own name, regardless of
whether they mention representing an unknown principal, both the agent and the third party are liable
under the contract. If the agent breaches the contract, the third party can sue the agent for damages. If
the agent is unable to pay, the third party can pursue the undisclosed principal for payment. However,
if the agent owes money to the principal, that amount will be subtracted from what the principal owes
to the third party. Thus, the third party has full recourse against the agent, but may have limited
recourse against the undisclosed principal.
 Cont.
The rights of undisclosed Principal- Article 2198
 The principal can reclaim any movable property (as defined in Civil Code Articles 1127-1139) that
the agent obtained from the third party, provided this does not negatively affect the third party's
rights regarding the agent. For instance, if the agent acquires a car in their own name but on behalf
of the principal, the principal can demand that the agent transfer the car to them, as long as this
action does not harm the third party. Article 2198 (1)
 As per article 2198 (2), if the agent has claims against the third party, the principal can substitute
himself for the agent to enforce those claims. In this case, the principal's position against the third
party is as strong as the third party's position against the principal under Article 2197(2).
 Since the agent could demand specific performance from the third party regarding the contract, the
principal can do the same. However, if the agent owes the third party any money, the third party can
offset that debt against their obligation under Article 2198.
 Cont.
3. Apparent Agency- Article 2195 (c)
 The authority is apparent if the person is not in fact authorized but the principal’s actions or
inactions give the impression to third parties that the former is authorized and third parties have
relied upon this impression.
 In Ethiopian law, apparent authority of the agent results in liability of the principal or the agent
jointly. Article 2195 ( Article 2195/C
 There is no prior contract of agency; however, the principal causes a third party to believe that
authority exists in a certain manner.
Note that under article 2195 (c ) , the liability of the principal and the agent is based on fault.
o Principal's Fault- The principal is aware that he did not authorize the agent, yet his behavior, actions,
or representations misled third parties.
o Agent's Fault- The agent acted with knowledge that he was not authorized.
 Cont.
3. Acts of the Agent beyond his power or with lapsed power ( Articles 2190- 2195)

 This article covers the situation where a person has attempted to act as an agent for a principal but
has acted outside any authority given him by the principal. It applies whether the agent was
empowered to act in some ways for the principal but exceeded that power, or was once authorized
under an authority which had lapsed. In such cases the principal can either ratify or repudiate the
agent’s acts.
 If the principal ratifies, the agent is considered to have acted within the scope of their authority, and the
principal is bound to third parties. Article 2192
 ወካይ የሆነ ሰው የወካዩን ድርጊት እንደተቀበለዉ ሊቆጠር የሚችለው በህግ የሚፀና ውክልና ኖሮ ነገር ግን ወኪሉ ከተሰጠው
ስልጣን በላይ ሰርቶ የተገኘ እንደሆነ ወይም የውክልና ስልጣኑ ካበቃ (ከተቋረጠ) በኋላ ወካዩን በመወከል የሰራቸውን
ሥራዎች በተመለከተ ብቻ ስለመሆኑ፡፡ Federal Supreme Court Cassation Bench (volume 13, File number
74538)
 Cont.
 If the principal repudiates (rather than ratifying), Articles 1808-1818 of the Civil Code will apply. This means
that a contract invalidated by one party does not bind either party, and both must restore, as much as possible,
the positions they occupied before the contract was made. Article 2193 (1)
What is the fate of a third party who contracted with an agent whose acts are repudiated by the principal? -
Articles 2193 (2), 2194-2196
1. Agent liability for third party
 If the principal repudiates the agent's actions under article 2193, the third party who entered into the contract
with the agent may seek damages from the agent. This is because the third party, having acted in good faith,
believed in the existence of valid authority. Articles 2193 (2) & 2194 (1)
 However, article 2194 (1&2) provides an exception where the agent can shift this liability to the principal.
 This exception occurs when the agent in good faith believed he did have authority to bind the principal.
 The agent’s belief must have been held by him at the time he attempted to transact for the principal. It must
also, it would seem, have been reasonable for the agent to think that he bad authority.
 It seems that this exception can occur only where the agent once had authority, which, unknown to him, had
terminated for some reason,
 It is possible that the courts will apply the provision also in the case in which the agent reasonably thought he
had a broader authority than he in fact possessed.
 Cont.
2. Joint and several liability of the Agent and the Principal- Article 2195
 The agent and principal are jointly and severally liable ( either or both the agent and principal can
be sued for the full amount of the liability, in one action, or m separate actions if the plaintiff so
desires).
There are three instances in which the principal and the agent are jointly and severally liable:
1. When the principal informs a third party that the agent has a power of attorney but then revokes
or restricts that authority without notifying the third party. In this situation, the third party relies
on the principal's initial representation of the agent's authority. As a result, although the principal
may not be bound by the contract, both the principal and the agent are liable for any damages
incurred by the third party due to their reliance on the agent's apparent authority. Article 2195 (1)
2. The principal is liable if he fails to request the return of a revoked or restricted power of attorney
or does not seek a court declaration regarding the revocation or restriction. If the agent presents a
document of authority to a third party, and the third party is unaware of any restrictions, the
principal will be held liable for any damages the third party incurs as a result of relying on that
document. Article 2195 (2)
 Cont.
3. When the principal has, in any way, led the third party to believe that the agent had the authority to act on his
behalf. The third party must genuinely believe that the agent has authority, and this belief must be reasonable
given the circumstances. The belief must stem from something the principal has done, though it doesn't matter
how the third party acquired that knowledge. They may have received it directly from the principal, or the
principal may have previously granted the agent similar powers. Article 2195 (3)
Exclusions of Agent's Liability for Compensation- Article 2196
The liability of the agent to pay compensation to the third party could be excluded under two circumstances.
o Article 2196(1) aims to protect the agent from liability to the third party due to the third party’s
misinterpretation of the document evidencing the agent's authority. If the agent presents a document
provided by the principal to a third party, the third party must rely on that document as an accurate
representation of the agent's authority. Since the principal is solely responsible for the content of the
document, only the principal is liable to the third party for any confusion regarding the agent's authority. The
agent is not liable unless he committed fraud that is, unless it can be proved that he knew what his authority
was and intentionally misrepresented to the party its scope.
o If the identity of the person with whom the third party contracts is not essential to the agreement, the third
party can hold the agent to the new contract but cannot claim damages from either the principal or the agent.
Article 2146 (2) Example, if an agent, acting without authority, agrees to supply a standard product on
behalf of the principal, the principal is not bound by that agreement. However, if the agent agrees to be
personally bound and the identity of the supplier does not matter to the third party, the third party must
accept the agent as the supplier and cannot pursue either the agent or the principal for damages.
 Cont.
 Although the agent has abused his or her authority by exceeding it, Article 2207 (1) requires the
principal to ratify the contract in certain situations. It states that “the principal is required to approve
the actions of an agent who, acting in good faith and in the interest of the principal, has deviated from the
authority given, whether explicitly or implicitly.” what is good faith ? – it is defined under article 2207 (2)
 Rights and Duties of the Principal and Agent
 As duties and rights are correlative, duties of an agent are rights of the principal and duties of an
agent are rights of the agent.
 These obligations and rights are similarly applicable to agency relationships arising out of law.
Duties of the Agent towards the Principal- Articles 2208-2218
 The agency contract may contain obligations of the agent to his principal but the following duties
are compulsory in any agency relation ship. Thus, duties of the agent to a contract of agency arise
either from agreement (express or implied) or from law (fiduciary nature of agency relationship).
 If the agency is contractual, the agent is bound to perform what he has undertaken to perform. This
amounts to the duty to perform the contract which the agent has made with the principal.
 Failure of the agent to carry out his obligations as agreed is non performance and results in the
liability of the agent toward the principal. Article 1771 of the civil code
 Cont.
1. The Duty to Act in Good faith (ጥብቅ የሆነ ቅንልቦና መኖር)- Articles 2208 (1) & 2209 (1)
 The agent shall act with the strictest good faith towards his principal. Article 2208 (1)
 As the agent is working without procedural control from the principal, the principal being away
from him/her, the concept “good faith” is a means to control the procedures to be employed
towards the interest of the principal.
 Good faith in agency relation is acting towards the best interest of the principal. የተወካዩ ድርጊቶች
ሁሉ ወካዩን ተጠያቂ የሚያደርጉ ስለሆኑ ተወካዩ ሥራውን በፍጹም ቅንነት መሥራት አለበት፡፡ ተወካይ የራሱን ጉዳይ ሲሰራ
ሊወስደው የሚችለውን ጥንቃቄ ለወካዩ በሚሠራበት ጊዜ ማሳየት አለበት።
 Article 2209(1) forbids an agent from gaining any advantage from a transaction conducted under
their authority, even if the principal also benefits from it.
 An agent may not make a secret profit out of the performance of his duties as an agent.
What is the effect of the agent's failure to act in accordance with the requirements of good faith?- The
principal will not be obligated to indemnify the agent for any damage caused to him by the revocation.
Article 2227 (1)
 Cont.
2. The Duty to Disclose Information & Not to misuses confidential information- Articles 2208/2 &
2209/2
The agent is not required to disclose all kinds of information to the principal.
Why? - It is impossible for the agent to disclose all kinds of information. In addition, the agent does not
perform his or her main task if is preoccupied by the task of disclosure. Some information may, if the
principal acquired it on the basis of this duty, affect the personal business interest of the agent.
o The agent shall disclose to his principal any circumstance which could justify the revocation of the agency or a
variation of its terms. Article 2208 (2)
Note: the standard to be used by the agent in deciding what information to be disclosed and by the
court in determining whether certain undisclosed information amounts to breach of the obligation is:
whether such circumstance would, if disclosed to the principal, justify the revocation of the agency or a
variation of its terms.
o The agent is required not to use, to the detriment of the principal, any information obtained by him
in the performance of his duties as agent. Article 2209 (2)
 Cont.
3. The duty to avoid Conflict of Interest ( Articles 2187, 2188 & 2209)
When should we say a conflict of interest exists?
A. Contracting with oneself- Article 2188
o The agent’s interests automatically conflict with the principal’s where the agent contracts with himself, either
on his own behalf or as the agent of another principal.
o Article 2188 permits the principal to cancel his contract with the third party in case of such conflict,- and he
may do so even though the third party is another principal, who did not know or have reason to know about
the agents' dual role. Article 2188 (1)
The federal supreme court cassation bench rendered the following judgment
ተወካዩ ለወካዩ ፍጹም ታማኝ የመሆን እና የወካዩን ጥቅም ሙሉ ለሙሉ የማስጠበቅ ግዴታ ተጥሎበታል፡፡ ስለሆነም ተወካዩ ስራውን
በሚያከናውንበት ጊዜ ቅድሚያ ሊሰጥ የሚገባው የወካዩን ጥቅም ብቻ በመሆኑ የጥቅም ግጭት ባለበት ሁኔታ ተወካዩ በስራው
አፈጻጸም ጥንቃቄ ሊያደርግ ይገባል፡፡ ምክንያቱም የጥቅም ግጭት በሚፈጠርበት ጊዜ አንድ ተወካይ ከራሱ ጥቅም ይልቅ
የወካዩን ጥቅም ሊያስቀድም ይችላል ተብሎ አይታሰብም፡፡ በመሆኑም አንድ ተወካይ በወካዩ ላይ ባቀረበው ክስ ወካዩን ወክሎ
መከራከር አይችልም፡፡ ( Vol 1, File No 14974)
o As in Article 2187, the principal must state his intention to cancel within two years from the time when he
realized the agent played his dual role, and the third party must reply within two months thereafter. Sub-article
(2) and (3) of Article 2187 apply under Article 2188 just as they do under Article 2187.
 Cont.
Article 2188 (3) provides one exception to the terms of Article 2188. This involves a commission
agent who sells for another goods in the agent’s own name. Where there is a fixed price for the goods
involved, such the commission agent may effect the transaction on his own account and still bind the
principal, unless the principal has forbidden this. Look article 2248
Generally, An agent must at all times act in the interest of his principal. Any failure to do so gives the
principal the right to terminate the agency contract, with forfeiture by the agent of all claims for
compensation.
 Cont.
B. Getting secret profit from the transaction
o The agent must act solely in the principal's interest and cannot, without the principal's knowledge, gain any
benefit from transactions made under their authority. Article 2209 (1)
o The phrase "without the principal’s knowledge" in Article 2209(1) suggests that if the agent informs the
principal in advance, the subsequent transaction does not constitute a conflict of interest, unless the principal
explicitly disallows it.
What is the effect of a contract concluded by the agent in a situation of conflicting interest?- entitled the principal
to cancel contracts in which the interests of the principal conflict with that of the agent provided that the third
party knew or should have known of that (Articles 2187 and 2188).
The principal, entitled to cancel the contract, must prove that the third party was aware of the conflict or that the
third party should have known of the conflict. Article 2187 (1)
 Unless the principal communicates their intention to cancel the contract within two years, they will lose the
right to do so, and the contract will remain valid. Article 2187 (2)
 If there is no proof that the third party was aware of the conflict before the date they claim, there is no
absolute time limit that bars the right to cancel. Article 2187 (3)
Note: Cancellation of agency due to for example, conflicts of interest must be initiated within a ten-year period.
In this regard, the federal supreme court cassation bench ruled that “ ወካይ የሆነ ወገን በተወካይ አማካኝነት የተደረገን
ህገ ወጥ ውል እንዲፈርስ በሚል የሚያቀርበው አቤቱታ በአሥር አመት ይርጋ የሚታገድ ስለመሆኑ ( Vol 13, File No 67376)
 Cont.
4. The Duty to Act Diligently(ትጉህ የመሆን ግዴታ)- Article 2211&2212
 The agent has to act as a bonus pater familias (like a good father would show towards his
family/children). Article 2211 (1) ተወካዩ በውክልና የተሠጠውን አደራ አንድ መልካም አባት ቤተሰቡን ለመጠበቅ
አንደሚያደርገው ሁሉ በትጋትና በጥንቃቄ ማድርግ አለበት፡፡
 The agent under article 2211(1) shall be liable for frand and for defaults in the
perfonance his duties ( Article 2211/2). ተወካዩ በማታለል በሠራው ሥራ ብቻ ሣይሆን ሥራውን
በሚያከናውን ጊዜ በፈፀማቸው ጥፋቶችም ተጠያቂ ይሆናል፡፡
 When the agent acts without consideration, he has to apply the same degree of diligence he
employs for his own affairs. Article 2211 (3) ውክልና ያለክፍያ ከሆነ ተወካዩ ስራውን ሲያከናውን የራሱን/
የግሉን ስራ ሲያከናውን የሚያሳየውን ትጋት ማሳየት ይጠበቅበታል፡፡ ተወካዩ የወካዩን ጉዳዬች እንደራሱ ጉዳይ አድርጐ
ተጠንቅቆ አእሰከሰራ ድረስ በስራ ላይ በድረሱ ጥፋቶች ተጠያቂ አይሆንም፡፡
 Note: the duty imposed under article 2211(3) is a lower standard than a basic negligence standard.
It would be more difficult to establish the liability of an agent acting with out consideration ( acting
for free)
 Cont.
5. The Duty to Perform Personally (ሥራን በራስ የመፈፀም ግዴታ) – Articles 2215-2217)

 In principle, the agent is bound to perform an act personally. This is because the agent is selected by the
principal based upon some trust and confidence in that particular agent, and that agent’s abilities.
The federal supreme court cassation bench ruled that “አንድን ተቋም ወክሎ ውል ለመዋዋል በህግ ስልጣን የተሰጠው ሥራ
አስኪያጅ ስልጣኑን ለሌላ ሰው በህግ ተቀባይነት ባለው ሁኔታ አስተላልፎ ውል የተደረገ እንደሆነ ተቋሙ በሥራ አስኪያጁ በራሱ
በመፈረም ውል አላደረገም በሚል ምክንያት ብቻ በውሉ አንገደድም ለማለት የማይቻል ስለመሆኑ (Vol 13, File No 68498)
 An agent may delegate responsibility under two circumstances:
1. Where the principal authorizes the agent- Article 2215(1) allows an agent to delegate responsibility when he or
she receives authorization from the principal.
 Cont.
Do you think such authorization can be inferred from the silence of the principal after due notification?
2. Where such authorization is implied from the surrounding circumstances- The agent may appoint
another agent if the authorization to delegate is implied from the circumstances that the delegation is a
matter of indifference. Article 2215 (2)
What circumstances amount to “a matter of indifference?”- It may be determined based on in certain
factors such as the motivations of the principal for choosing that particular agent, and the scope of the
agency relationship, including the expectations of the principal.
3. When there is emergency situation- if an agent cannot perform his or her responsibilities (for
example as a result of war), the agent has an obligation to appoint a substitute so long as the following
three elements are met. Article 2215 (3)
A. The best interests of the principal require an appointment;
B. Unforeseen circumstances must have prevented the agent from carrying out the agency; and
C. The agent is unable to inform the principal of the circumstances.
 Cont.
Liability of the First Agent
 Where the agent does not make a valid appointment , he is liable for all the acts of the appointee as if
they were the agent’s acts. Article 2216 (1)
 The liability of the first agent arises from their appointment of a substitute without proper
authorization, which resulted in damage to the principal caused by the actions of that substitute
agent.
 When the agent is authorized to appoint a substitute, their responsibility is limited to the care
exercised in choosing that substitute and providing them with appropriate instructions. Article 2216
(2) For instance, if the substitute agent behaves inappropriately despite being selected and instructed
properly, the agent may not be held liable for the actions of that substitute.
 Cont.
6. Keeping of accounts and rendering of statements - Article 2210 &2213
 An agent must keep accurate records of his transactions or dealings and must account for all money
and property belonging to the principal. Article 2210 (1)
 The entire amount is considered as belonging to the principal. All profits that result from the
contract of agency belong to the principal.
 This obligation remains even if the agent mistakenly receives additional amounts from third parties.
 If the agent partakes in the commingling of the principal's funds, he will be liable to return those
sums along with any interest accruing from the date the funds were taken. Article 2210 (2) ተወካዩ
ለወካዩ የሚገባውን ገንዘብ ለራሱ አውሎት እንደሆነ ገንዘቡ ከተወሰደበት ጀምሮ ከሚታሰብ ወለድ ጋር ለወካዩ የመመለስ
ግዴታ አለበት፡፡
 The agent must provide an account of their management of affairs to the principal whenever requested. Article 2213 (1)
በወካይ ጥያቄ መሰረት ተወካዩ በውክልና የሚያከናውነውን ተግባር የሰራ ሂደት እና የሂሳብ መግለጫ የማቅረብ ግዴታ አለበት፡፡
Article 2213 provides the duty to report to the principal.
 The agent is required to promptly notify the principal once they have completed their agency duties.
Article 2213 (2) ተወካይ የተሰጠውን የውክልና ስራ ማጠናቀቁን ያለመዘግየት ለወካይ ማሳወቅ አለበት፡፡
 Cont.
Once the report is submitted, the principal can either reject or approve the management- the report.
 Cont.
7. The Duty to Return the Document- Article 2184 &2185
 Article 2184 commands that an agent must return any instrument showing his authority to the
principal whenever that authority comes to an end. Article 2184 (1)
 The agent may not even keep the instrument until all his 'accounts with the principal have been
settled, although he could have a copy made as evidence of his agreement with the principal. Article
2184 (2) ተወካዩ ወካዩ ያልከፈለው ጥቅማጥቅም ቢኖርንም የውክልና ሰነዶችን እንደማስያዣ መያዝ አይችልም፡፡ The
reason for this requirement is that the agent otherwise could obligate the principal to unknowing
third persons under Articles 2181 and 2195.
 The principal must be able to compel the return of documents of authorization he has signed. If the
agent refuses to give the document to the principal, the principal could have the court demand its
return.
 If an agent loses, or claims he has lost a document of authorization, the principal can have a court
declare that the document is revoked (Article 2185) ተወካዩ የውክልና ወረቀቱ መጥፋቱን ያስታወቀ እንደሆነ
በወካዩ ኪሳራ ከፍርድ ቤት የውክልናውን መሰረዝ የሚያሳይ ውሳኔ ማግኘት ይቻላል፡፡
 Duties of the Principal towards the Agent
1. The Duty to Provide Remuneration- Article 2219&2220
 The agent is entitled to receive remuneration for his services only when there is an express or
implied term in the contract of agency providing for this remuneration. Article 2219 (1)
 The court has the discretion to reduce the remuneration fixed in the contract where it appears
excessive and out of proportion to the services rendered by the agent. Article 2219 (2)
 The power of the court in cases where the remuneration fixed in the contract appears to be low is
not provided in the Civil Code.
Why? This may be understandable in cases where the agent has possibly higher bargaining power than
the principal.
Can the court increase the amount paid to the agent by analogy if it is deemed too low? Why or why
not?
There are two lines of arguments.
1. There is nothing preventing the court from using analogy to raise the amount paid to the agent,
ensuring equality between the parties in the contract.
 Cont.
1. In the absence of an agreement, it is presumed that the agent is acting gratuitously, as stated in
Article 2220. Therefore, the court cannot increase the payment if it is considered low.
My view- if the court has the authority to evaluate the value of the services provided by the agent and
adjust the compensation to ensure its proportional, it can also be contended that the court should have
the power to raise the compensation if it seems insufficient.
What if the contract is silent about remuneration?
 In the absence of a contractual stipulation, the agent is not entitled to any compensation. This means
that a gratuitous agency will be implied. However, there are two important exceptions to this rule.
1. The first exception is, if the agent has carried out the agency within the scope of his professional
duties, remuneration will be obligatory. For example, lawyers, accountant, and real estate brokers
all carry out their agency duties within the scope of their professional duties, and therefore, would
usually have a right to remuneration from the principal.
2. The second is, even if the contract does not stipulate remuneration, and the agent is entitled to
remuneration where it is customary. This will depend largely on the particular community and
industry that the agency takes place.
 Cont.
2. The Duty to Advance Payment and Reimburse Expenses

 The principal has the obligation to advance to the agent whatever money or property is
necessary to carry out the expected agency. Article 2221 (1)
 The money advanced by the principal may not be sufficient to run the affairs of the principal.
Or the principal might not have advanced money for the agent. In such cases the agent may
employ his own money or money from other persons. These out lays/expenses incurred by the
agent need to be reimbursed. Article 2221 (2)
 Cont.
 Note must be taken that ‘expenses incurred in the proper carrying out the agent’ are those that the
agent has incurred while acting within the scope of his or her power.
 The fact that the transaction that the agent was authorized to carry out was not successful is not a
valid ground for the principal to refuse payment due to the agent. Article 2223(1).
 However, the principal may deduct the amounts they are required to pay (including remuneration)
if the business was unsuccessful due to the agent's failure to properly perform their duties.
What is the consequence of failing to advance the money is under the Civil Code, as the principal also
has the obligation to reimburse the agent for any outlays made by the agent in the “proper carrying out
of the agency?
The consequences of failing to advance the money under the civil code are unclear, as the principal is
also obligated to reimburse the agent for any expenses incurred in the proper carrying out of the
agency, along with interest from the date the expense is incurred. Therefore, there is no practical
difference between 'advancing' the funds and 'reimbursing' the amounts used for the agency.
Nonetheless, it is advisable for the agent to request advances whenever possible.
 Cont.
3. Duty to release the Agent from Liabilities and Damage – Article 2222
 The principal is liable to the agent, where the latter has incurred damages while carrying out the agency
(Article 2222(2)).
 The principal should release the agent from liability that the latter incurs in the interest of the principal
(Article 2222(1)).
 Does Article 2222(1) mean that the principal will be vicariously liable when the agent commits a tort while
representing them?
4. Agent’s Lien Right- Article 2224
 The agent retains a lien on the items entrusted to them by the principal for the purpose of fulfilling the
agency until they receive payment for the amounts owed to them in relation to the agency.
 If the principal has not fulfilled their obligation to pay for remuneration, expenses, damages, or liabilities,
and the agent is holding goods that belong to the principal, the agent has the right to exercise a lien on those
goods. The agent can keep possession of them until the principal has settled the amounts owed to the agent.
 However, the agent cannot assert a lien over the document that serves as evidence of the agency relationship
between the agent and the principal, as stated in Article 2184.
 Extinction of Agency Relationship-የውክልና ግንኙነት ቀሪ መሆን
Grounds for Extinction of Agency (ውክልና ቀሪ የሚሆንባቸው ምክንያቶች)
1. Termination by Agreement of Parties to the Agency Contract
 Contracts are not only created to establish obligations but can also be entered into for the purpose
of extinguishing obligations. Article 1675.
 A contract may terminate where the parties so agree. Article 1819 (1)
 Thus, the principal and the agent may mutually agree to terminate the existing agency relationship.
2. Revocation (የወካዩ ተወካዩን መሻር)- Article 2226-2228
 Revocation is the withdrawal of the power of the agent by the principal.
 No restriction is placed on the power of the principal to revoke the agency. Thus, the principal may
revoke the relationship ant time and at his own discretion. Article 2183 and 2226 (1)
 There is no obligation of giving notice on the part of the principal to revoke the relationship.
 ወካይ ውክልናውን መሻር በፈለገ ጊዜ የጊዜ እና የሁኔታ ገደብ ሳይደረግበት በራሱ ግንዛቤ አስፈላጊ መስሎ
በታየው ወይም ባሰበው ጊዜ ሁሉ ለእንደራሴው የሰጠውን የውክልና ስልጣን ማንሳት እና በመካከላቸው የነበረውን
ግንኙነት ማቋረጥ ይችላል፡፡
 Cont.

What is the effect of revocation?

 When a principal revokes an agent's authority before the agreed-upon date or under conditions that
negatively affect the agent, the principal is obligated to compensate the agent for any damages
incurred.Article 2227 (1)
Is there a defense for the principal? – Article 2227 (2)
1. The principal shall not be liability where he has a just motive for revocation.
2. If the agreed-upon date for the agency was set solely for the principal's benefit, the principal is not
liable for damage upon revocation.
What is required for a principal to revoke the agency when the agent is a common agent appointed by
multiple principals?- Article 2228
 In cases where the agent is common agent, meaning in case where the agent is appointed by several
principals for common purpose, the consent of all the principals is necessary for revocation. Article
2228 (1)
 One of the principals may not revoke the agency unless he has just motive to make the revocation.
Article 2228 (2)
 Cont.
3. Renunciation by the agent (ተወካዩ የውክልና ስልጣኑን መተው)- Article 2229
 Renunciation is a unilateral declaration made by the agent to terminate the agency relationship that exists with
the principal.
 The agent is bound to provide an agreed-upon, customary, or circumstantial period of notice to the principal
before resigning the agency authority. Article 2229 (1)
 ወካዩ የውክልና ግንኙነቱን ማቋረጥ በፈለገ በየትኛውም ጊዜ ሁሉ ስልጣኑን የመሻር መብት እንዳለው ሁሉ እንደራሴውም
ስልጣኑን ላለመጠቀም ወይም ለመተው በፈለገ ጊዜ ሁሉ ስልጣኑን ሊተው እና ሊያቆም ይችላል፡፡ይሁንና ከወካዩ ስልጣን በተለየ
መልኩ ስራውን ለማቆም በወሰነ ጊዜ አስቀድሞ ወካዩን የማሳወቅ ግዴታ አለበት፡፡ህጉ ይህንን ግዴታ ያደረገበት ምክንያት
እንደራሴው ስራውን በሚያቆም ጊዜ ንብረቱ ወይም ስራው ከጠባቂ ማጣት የተነሳ ለብልሽት፣ለብክነት ወይም ለጥፋት
እነዳይዳረግ በማሰብ ነው፡፡
 Can parties (principal and agent) agree to the effect that the agent cannot terminate the agency relationship
except upon the consent of the principal?
 The agent is bound to indemnify the principal when the principal suffers damage due to the agent's failure to
provide notice. Article 2229 (2)
Is there a defense for the agent?- If the agent can demonstrate that they cannot continue the performance of their
duties without incurring considerable loss, they will not be liable for damages, even if they fail to provide notice
of their renunciation.
 Cont.
4. Death, incapacity, absence or bankruptcy of the agent (Article 2230)

 Is there any situation in which an agreement between the agent and principal to continue the
agency relationship after the agent's death becomes effective?
 Does the phrase 'unless otherwise agreed' in Article 2230 apply to the death of the agent, or is it
limited to other circumstances?"
 Cont.
 A narrow interpretation of Article 2230(1) reveals that the phrase 'unless otherwise agreed' does not
apply to the death of an agent. Since a deceased agent cannot act on behalf of the principal, any
agreement to continue the agency relationship after the agent's death cannot be effective.
 A broad interpretation of Article 2230(1) allows for the possibility of continuing the agency
relationship even after the agent's death. If the agent and the principal agree in their contract to
maintain the relationship after the agent's death, it may continue through the agent's heir.
Which interpretation do you support?- Here is my view:
 In principle, death, incapacity, or bankruptcy of the agent results in the termination of the agency
relationship . However, through prior agreement, the parties may stipulate that the relationship
continues with the agent's heirs. Article 2230 (1)
 Article 2230(2) imposes specific duties on the heirs of the agent. They are required to inform the
principal of relevant circumstances and to manage the agency affairs until the principal assumes
control.
 Cont.

Death, incapacity or bankruptcy of the principal (Article 2232)

 Death, incapacity, declaration of absence, and adjudication of bankruptcy of a principal automatically
terminate the agency relationship unless there is a contrary agreement between the parties.
 The agent has a duty to manage the affairs of the dead principal for a reasonable period of time if they have
already begun managing those affairs until the heirs or legal representatives of the principal can take over.
Article 2232 (2)
What if the legal representatives or heirs representatives do not take the management sooner?
Why does the law refer to 'management' when the agent could also be a special agent?- do you think the
obligation provided under article 2232 (2) is applicable for general agency only?
 Cont.
Yes, because when the principal dies, succession begins, and ownership of the affairs changes. The agent is then
only required to safeguard the rights and interests of the inheritance.
 If either the principal is a body corporate, such as a share company or private limited company, and ceases to
exist under law, a power of attorney given by it to the agent ceases to exist. Article 2182 (2)
 In addition to the points discussed above, the performance of obligations by each party within the specified
timeframe is another factor that can terminate agency obligations. Likewise, invalidation, cancellation, or
other grounds for extinction can also end agency relationships.
 An agency relationship can also be terminated upon the occurrence or cessation of a specific event. Once
that event occurs or ceases, the agency will be terminated. For example, A authorizes B to act on his behalf
while A is away, such as when he goes abroad, and when A returns, the agency authority will be terminated.
 Furthermore, an agency relationship can be terminated upon the lapse of time. In their agreement, the
parties to an agency relationship may specify the duration for which the relationship will exist. If such a
specification is included in the contract, the agency relationship ends when the specified time expires. For
example, if A authorizes B to represent him in a certain juridical act or transaction for one year, the agency
will terminate once the one-year period lapses.
 Agency in Trade
As a result of legal and commercial developments, various types of agents have emerged, each
distinguished by name and function, performing different roles within their respective contexts.
Review Articles 2234 to 2252 of the Civil Code and the provisions of the new Commercial Code that
govern commercial agents. Discuss the modes of creation, types, nature, rights and duties of the
parties, and the extinction of the agency relationship.
Hint:
Commercial brokers- articles 54- 57 of the new commercial code
Commission agents- Articles 58- 60 of the new commercial code
Commission to buy or to sale- Articles 2234- 2239 of the civil code
Del Creder Commission Agent- Articles 2240- 2250
Forwarding agency- Articles 2251- 2252 of the civil code
Any Question?