Business Contracts

Representation can be defined as an action whereby a person invested with a contractual power for such purpose, the representative, performs a legal act in the name and on behalf of another person, the principal, the effects of which are produced directly for the principal . According to the Court of Cassation, the legal act in question cannot be likened, for a trade association, to a simple assig …

Representation

Representation can be defined as an action whereby a person invested with a contractual power for such purpose, the representative, performs a legal act in the name and on behalf of another person, the principal, the effects of which are produced directly for the principal . According to the Court of Cassation, the legal act in question cannot be likened, for a trade association, to a simple assignment to circulate information delivered by a lawyer to his members . 

Ordinance No 2016-131 of 10 February 2016, reforming the law of contracts, the general regime and proof of obligations, enshrined a right of representation in the Civil Code, in Articles 1153 to 1161. The rules laid down are strongly modeled on the articles governing agency agreements. 

Firstly, the agent represents the principal, but only within the limits of their agency agreement. Article 1989 of the Civil Code stipulates that the agent may do nothing beyond the scope of his mandate  which means that the scope of his powers must be determined. According to the Court of Cassation, an agency agreement for the management and compensation of claims entrusted by the insurer to a general insurance agent does not imply the power to represent the insurer in legal proceedings . While the agency agreement may be general or special under Article 1987  , there are cases where the Court has raised presumptions regarding its scope. Thus, according to the Court of Cassation, a leading insurer is presumed to have been invested with a general agency agreement, in the absence of a challenge by the co-insurers .

By virtue of Article 1998 of the Civil Code, the principal is bound to perform the undertakings contracted by the agent, in accordance with the powers granted to him. New Article 1154, paragraph 1, takes up these provisions, stipulating that when the representative acts within the limits of his powers in the name and on behalf of the principal, the latter alone is bound by the relevant commitments. The case law on this subject is consistent : the performance of contractual obligations arising from acts performed by an agent on behalf of and in the name of his principal is incumbent on the latter alone, the principal being bound towards the third party as if he had contracted with the latter directly. Thus, the agent of a foreign company in France cannot be personally ordered to reimburse customers of the principal company for the amount of a deposit paid on the price of an unfilled order . Similarly, the operator of a ship who acts in the name and on behalf of the owner as an agent is not liable to third parties to the agency agreement for undertakings made in the performance of his agency . Furthermore, the terms of a contract concluded by the agent within the limits of his authority are binding on the principal . On the other hand, the Court of Cassation has held that an impresario, or talent agent, whose remit is to place an artist, is not acting as the latter's agent, but as an intermediary, and as such is solely liable for the commitments he makes to third parties . This hypothesis is now covered by new Article 1154, paragraph 2, which provides that “when the representative declares that he is acting on behalf of another but contracts in his own name, he alone is bound vis-à-vis the other contracting party” .

The principal is of course bound by the acts of his representative, but only insofar as the latter has acted within the limits of their agency agreement. In effect, the agent must not “compromise”  the principal within the meaning of Article 1989, nor act “beyond the scope of his/her mandate” . Article 1153 echoes these provisions, stating that “the legal, judicial or contractual representative is only entitled to act within the limits of the powers conferred on him or her”. When the agent exceeds his powers, the principal is only “bound by what may have been done in excess, to the extent that he has ratified it expressly or tacitly” . In principle, legal acts performed without authority are not binding on the principal. Previously subject to invalidity, they are, since the reform of contract law which instituted new Article 1156 , unenforceable against the principal, except in the case of an apparent agency agreement . In the event of misuse of powers, i.e. where the agent enters into a contract with a third party in fraud of the principal's rights, the latter may, under the terms of new Article 1157 , claim invalidity of the contract. By the same token, the principal is not in principle liable for the agent's misconduct. Article 1992 of the Civil Code states in effect that “the agent is liable not only for fraud, but also for any faults he commits in the course of his duties”. If the agent commits fraud, he or she is liable, but the courts were not clear as to whether the principal was also liable to the third party. In the case of an action for invalidity (nullité) on the grounds of fraud on the part of the agent, the commercial chamber of the Court of Cassation has on two occasions held that an agent who uses fraudulent methods such as to vitiate a client's consent is not, for the purposes of the conclusion of the contract, a third party, with the result that the fraud is enforceable against the principal . Following a ruling by the mixed chamber in 2021, the Court established the principle that fraud committed by an agent in the exercise of an agency agreement only gives rise to extra-contractual liability on the part of the principal if the agent has personally committed a fault, which it is for the victim to prove .

Vocabulaire juridique, CORNU, Association Henri CAPITANT, 14th updated edition. See Cass. 1re civ, 25 November 2015, LawLex202300011750JBJ and LawLex202300011751JBJ, holding that the representation of a co-owners' association by a property management company does not cause it to lose its status as a non-professional, so that it can benefit from the protective provisions of the Consumer Code, notwithstanding such representation.

Cass. com. 3 March 2015, LawLex202200008817JBJ.

Cass. com, 22 May 1991, LawLex202200008815JBJ.

See, in this respect, Cass. 1re civ, 18 October 2005, LawLex202200008889JBJ: since the capacity of a broker does not necessarily imply that of an agent, a company is not liable for the consequences of its broker's actions, deemed to have been carried out in its name, if it did not participate directly in them. Cf.: Cass. com. 13 May 2003, LawLex202100006410JBJ: a broker whose role is to put a merchant-buyer in contact with a wine producer in order to negotiate the latter's harvest, is acting as an agent for both parties, so that the preparation and dispatch by the latter of the “confirmation letter” to the seller and the buyer, without any formal agreement on their part, is equivalent to a completed sale, in accordance with the long-standing and established practice in the Bordeaux region, unless a objection is made within a very short period fixed according to the fair and established practices of the profession, i.e. 48 hours from receipt of said letter.

New Article 1156 enshrines the theory of appearance, which originated in the legal precedents, according to which mere appearance is sufficient to produce effects with regard to third parties who, as a result of a legitimate mistake, were unaware of the reality.

Art. 1998, para. 2, Civil Code. For an application in which the validity of the agent's powers is established by the courts after subsequent approval of his decisisons by the principal, See Cass. com. 2 June 1993, LawLex202200006444JBJ.

Art. 1156, Civil Code: "An act performed by a representative without authority or in excess of his authority may not be relied on against the principal, unless the contracting third party legitimately believed in the reality of the representative's authority, in particular because of the principal's conduct or assertions. If the third party was unaware that the act was performed by a representative without or in excess of his powers, he may seek invalidity. Neither the act's invalidity nor its unenforceability can be invoked once the principal has ratified it.

New Article 1156 enshrines the theory of appearance, which originated in the case law, according to which mere appearance is sufficient to produce effects with regard to third parties who, as a result of a legitimate mistake, have been unaware of the reality.

Art. 1157, Civil Code: “Where the representative misuses his powers to the detriment of the principal, the latter may seek invalidity of the act performed if the third party was aware of the misuse or could not have been unaware of it”.

Cass. com, 24 May 1994, LawLex200500005941JBJ; 13 June 1995, LawLex202200008958JBJ.

Cass. mixte, 29 October 2021, LawLex202100006463JBJ.

Cf. Art. 1153 Civil Code: “ Legal, judicial or contractual representatives are entitled to act only within the limits of the powers conferred on them”.

Cass. 2e civil, 13 June 2013, LawLex202200008891JBJ.

Art. 1987, Civil Code: “It is either specific and for a matter or certain matters only, or general and for all the affairs of the principal”; Art. 1988, Civil Code: “An agency agreement conceived in general terms covers only acts of administration. If it concerns alienation or mortgages, or any other act of ownership, the agency agreement must be express”.

Cass. 2e civ, 8 June 2017, LawLex202200008892JBJ, : a court of appeal cannot consider that the lead company can only act to the extent of the percentage it holds in the co-insurance, on the grounds that the clause in the contract concerning co-insurance only mandates it to manage the claim and indemnify the policyholder on behalf of the co-insurers, without providing for an agency agreement to represent them in court, since the lead company is presumed to have been invested with a general agency agreement to represent them in the absence of contestation by the co-insurers; Cass. com., 21 November 2018, LawLex202200008893JBJ: the lead insurer is presumed to have been vested with a general agency agreement if none of the co-insurers disputes it, so that the lead insurer can sue for reimbursement of the entire indemnity paid out, without being limited to its own share, in the absence of any challenge to its agency agreement by the other co-insurers.

Cass. 1re civ, 14 November 1978, LawLex202200009592JBJ; Cass. 3e civ, 21 March 2019, LawLex202200009126JBJ.

Cass. 1st civ, 14 November 1978, LawLex202200009592JBJ.

Cass. com. 21st March 1995, LawLex202200008686JBJ.

Cass. com, 21 March 1983, LawLex202200009138JBJ.

Business Contracts

462. Representation

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Les décisions de justice citées dans ce paragraphe :

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462. Representation

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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