Business Contracts

The agent's power of representation is governed by specific provisions of the agency agreement, as well as by the articles relating to ordinary civil law on representation resulting from the reform of contract law. The proper discharge of an agency agreement traditionally entails certain consequences for third parties, both for the principal and the agent. 
With regard to the principal, Article 19 …

Proper performance of agency agreement

The agent's power of representation is governed by specific provisions of the agency agreement, as well as by the articles relating to ordinary civil law on representation resulting from the reform of contract law. The proper discharge of an agency agreement traditionally entails certain consequences for third parties, both for the principal and the agent. 

With regard to the principal, Article 1998, paragraph 1 of the Civil Code stipulates that “the principal is bound to honor the commitments entered into by the agent, in accordance with the authority given to him”. On the agent's side, Article 1997 stipulates: “An agent who has given the party with whom he is contracting in such capacity sufficient knowledge of his powers is not bound by any guarantee for what has been done beyond that, unless he has personally submitted to them”. Taking up the substance of these provisions, new Article 1154, paragraph 1, states: “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 commitment thus entered into”.

As a consequence of these texts, and in particular of the principle of the agent's transparency, acts concluded by the agent are deemed to have been concluded by the principal, so that the latter must implement them. An association of co-owners is thus liable to the co-owners for any faults committed by its agent, the management agent, in the performance of his duties . As the performance of contractual obligations entered into by an agent, in the name and on behalf of his principal, is incumbent on the latter alone, and solidarity cannot be presumed , a court of appeal cannot hold an undertaking liable, alongside its principal, on the grounds that in its capacity as exclusive agent, it must answer for the errors and negligence of its principal . For the same reason, the trial courts cannot declare that a co-owners' association is entitled to bring an action for damages against the undertaking entrusted with the management of claims and recourse, on behalf of property damage insurers, alongside these insurers .

In effect, the agent's consent is legally binding on the principal. A court of appeal cannot, therefore, cancel a sale for non-conformity of the goods, when the buyer's agent has checked and accepted them without reservation . Furthermore, the principal's consent is affected by the very defects that vitiated the consent given by his agent acting within the limits of his powers . The terms of a contract concluded by the agent within the limits of his powers are binding on the principal, so that a court of appeal cannot set aside a clause limiting liability in a contract of carriage, on the grounds that, in order to enforce such a clause, the carrier should have brought it to the attention of the owner of the goods, even though the carrier had been entrusted with the carriage by the owner's agent .  

Similarly, the exclusion of coverage clause in an insurance policy negotiated by an agent on the principal's behalf is binding on the principal, so that the latter's claim against the insurer is dismissed .

Furthermore, by the mere fact of representation, service on the agent causes the time-limits to run against the principal , a third party may assert against the principal that he has paid in full to the agent , and the agent's acknowledgment is enforceable against his principal, when this admission relates to facts which are personal to him and which do not exceed the limits of the agency agreement with which he has been entrusted .

An agent who acts in accordance with his agency agreement is not a party to the contract concluded between the principal and his co-contractor, and therefor cannot, unless otherwise stipulated in the contract , be held liable with regard to third parties for the committments he has entered into in the name and on behalf of the principal . A court of appeal cannot therefore order an agent to pay damages to one of his principal's service providers, without finding that the agent, who has no legal relationship with the service provider, was at fault in tort or quasi-delict in the performance of his duties . By the same token, since the agent is not a party to the contract between the principal and his co-contractor, he cannot sue the latter for contractual liability. For example, when a travel agency is mandated to organize a holiday, it is a third party to the contract of carriage concluded between its client/principal and the carrier, so that it has no standing to bring an action for liability against the carrier, on the basis of a breach of the terms of the contract of carriage . 

Lastly, third parties may seek the liability of the agent in tort, in the event of misconduct. Following a decision handed down by the plenary assembly, the Court of Cassation considers that, even if he is not liable for any commission, a purchaser whose misconduct has caused the real estate agent, through whom he was introduced to the seller who had commissioned him, to lose his commission, must, on the basis of liability in tort, compensate the real estate agent for his loss . 

Cass. 3e civ, 15 February 2006, LawLex202300013651JBJ. See also. Cass. 3e civ, 2 October 2002, LawLex202300013748JBJ, for a leasing company bound, in its capacity as principal, by the acts of its agent, within the limits of the agency agreement given to the latter.

Cass. 3e civ, 23 November 1988, LawLex202300013747JBJ, overruled the decision of a court of appeal which had ordered a husband and wife, married under a separate property regime, jointly and severally to pay the fees of the architects commissioned to build their house, on the grounds that the husband had acted as his wife's apparent agent.

Cass. soc., 12 December 1962, LawLex202300013749JBJ.

Cass. 3e civ, 13 February 2013, LawLex202300013734JBJ, ruling that the agent of a group of works and service providers is liable, in their capacity as such, for faulty workmanship committed by an undertaking entrusted with the facade cladding work package, since the contractual clauses stipulate that the agent is responsible for all the work,  even if carried out by his co-contractors, and that he declares himself jointly and severally liable with all the undertakings making up the grouping to the project owner, in respect of whom he is responsible for the faultless completion, quality and price of the works.

Cass. com. 21 March 1995, LawLex202200008686JBJ. See also. Cass. com., 14 December 1999, LawLex202200008687JBJ, holding that a bank could not, in its capacity as agent of another defualting bank, be considered liable to the principals of a banking network, since it does not follow from the contractual documents governing the network that it was, in this capacity, required to take any steps to enable the principals to revoke their orders.

Cass. 3e civ, 16 May 1977, LawLex202200009593JBJ. See also. Cass. 1re civ., 14 November 1978, LawLex202200009592JBJ, noting that the performance of contractual obligations entered into by an agent in the name and on behalf of the principal is incumbent on the latter, so that a court of appeal cannot order the representative of a foreign company in France, in his capacity as agent, to reimburse the latter's customers the amount of a deposit paid on the price of an unfulfilled order.

Cass. 1re civ, 22 June 2004, LawLex202300013650JB.

Cass. ass. plén., 9 May 2008, LawLex202300013745JB. Also see Cass. 1re civ, 18 December 2014, LawLex202300013746JB.  See previously, Cass. 1re civ, 27 April 2004, LawLex202300014269JBJ, holding that a court of appeal cannot order the purchasers of a property to pay damages to the real estate agent, entrusted with a non-exclusive sales agency agreement, on the basis of Article 1240 of the Civil Code, on the grounds that they engaged in tactics intended solely to enable them to avoid payment of the commission to which the agent is entitled in the event of the sale being successfully completed, even though the commission was not owed by the purchasers and the agency could not therefore invoke any harm whatsoever against them. 

Cass. com. 9 May 1985, LawLex202200008684JBJ.

Cass. 3e civ, 21 March 2019, LawLex202200009126JB.

Cass. com. 12 February 1980, LawLex20220000000911JBJ; 17 February 1998, LawLex202200008818JBJ.

Cass. com, 2 March 1976, LawLex202200005359JBJ. However, the principal cannot claim invalidity of the contract on the grounds of fraudulent non-disclosure on the part of his co-contractor, since his agent was aware of this at the time the contract was taken out, See Cass. 1re civ., 19 mai 1999, LawLex202300011973JBJ, for an insurance contract.

Cass. com, 21 March 1983, LawLex202200009138JBJ.

Cass. 1re civ. 9 May 1996, LawLex202200008685JBJ, 

Cass. 3e civ, 5 June 1984, LawLex202300013652JBJ; Cass. 1re civ, 29 September 2004, LawLex202300013653JBJ, holding that a court of appeal cannot hold that a lessee who, having sent letters of complaint to the lessor's agent, had never sent a formal notice directly and personally to the lessor and therefore could not claim damages from her, whereas a formal notice sent to the agent produces effect with regard to the principal.

Cass. com. 8 December 1998, LawLex202300013753JBJ. See also Cass. 1re civ., 9 May 1994, LawLex202300013752JBJ, holding that an insurer who sends a cheque to the agent is validly discharged of his obligation to pay the insurance indemnity to the principal.

Business Contracts

497. Proper performance of agency agreement

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Les notions juridiques connexes

497. Proper performance of agency agreement

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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