CHAPTER 3: AUTHORITY OF AGENTS
Section 1 : General Provisions
Article 3:101 : Scope of the Chapter
(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.
(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.
(3) This chapter does not govern the internal relationship between the
agent or intermediary and its principal.
Article 3:102 : Categories of Representation
(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.
(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).
Section 2 : Direct Representation
Article 3:201 : Express, implied and apparent authority
(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.
(2) The agent has authority to perform all acts necessary in the circumstances to achieve the purposes for which the authority was granted.
(3) A person is to be treated as having granted authority to an apparent
agent if the person'sstatements 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
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
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.
Article 3:204 : Agent acting without or outside his authority
(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.
(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.
Article 3:205 : Conflict of Interests
(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.
(2) There is presumed to be a conflict of interest where:
(a) the agent also acted as agent for the third party; or
(b) the contract was with itself in its personal capacity.
(3) However, the principal may not avoid the contract:
(a) if it had consented to, or could not have been unaware of, the agent's so acting; or
(b) if the agent had disclosed the conflict of interest to it and it
had not objected within a reasonable time.
Article 3:206 : Subagency
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
(1) Where a person acting as an agent acts without authority or outside
its authority, the principal may ratify the agent's acts.
(2) Upon ratification, the agent's acts are considered as having been
authorised, without prejudice to the rights of other persons.
Article 3:208 : Third Party's Right with Respect to Confirmation of Authority
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.
Article 3:209 : Duration of Authority
(1) An agent's authority continues until the third party knows or ought
to know that:
(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
(c) the agent has become insolvent or, where a natural person, has died or become incapacitated; or
(d) the principal has become insolvent.
(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.
(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
Section 3: Indirect Representation
Article 3.301 : Intermediaries not acting in the name of a Principal
(1) 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 under
the conditions set out in Articles 3:302 to 3:304.
Article 3:302 : Intermediary's Insolvency or Fundamental Non-performance
to Principal
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
(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.
Article 3:303 : Intermediary's Insolvency or Fundamental Non-performance
to Third Party
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
(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.
Article 3:304 : Requirement of Notice
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