Business Contracts

Prior to the 2016 reform of contract law, the Civil Code did not take into account the agent's lack of power of representation. While the provisions of Article 1998 of the Civil Code require the principal to perform the commitments entered into by the agent in accordance with the agency agreement, with no obligation, except in the event of ratification, in respect of anything done in excess of the …

Lack of authority

Prior to the 2016 reform of contract law, the Civil Code did not take into account the agent's lack of power of representation. While the provisions of Article 1998 of the Civil Code require the principal to perform the commitments entered into by the agent in accordance with the agency agreement, with no obligation, except in the event of ratification, in respect of anything done in excess of the agent's authority - which is the case where the agent's authority is exceeded - the Code is silent on the question of the agent's lack of authority. However, it was on the basis of Article 1998 that the courts most often sanctioned this irregularity of representation by invalidity, before Article 1156 was adopted following the 2016 reform.

According to case law, the agent's lack of authority calls into question the validity of the contract entered into by the agent . The Court of Cassation has ruled that invalidity of a contract (or voidance [caducité] in the case of a promise) due to the agent's lack of authority, which is relative, can only be requested by the represented party . Consequently, a court of appeal cannot annul a contract for the construction of a single-family home, which the project owner is seeking to enforce, on the grounds that the contract in question was signed, not by the project owner, but by a third party who had no agency agreement to do so, whereas the invalidity of a contract on the grounds of the agent's lack of authority can only be sought by the principal . Similarly, the invalidity of a lease contract cannot be sought by a tenant whose lease was granted by an undertaking whose manager, appointed for an unlimited term, had died when the contract was signed . 

Regardless of who is the proprietor of the action for invalidity, an act implemented without authority is deprived of its effects with regard to all persons. Thus, even if the claim for invalidity of a promise of sale made without her consent by her husband on a joint property is brought personally by the wife, the sole proprietor of the action, the invalidity nevertheless produces its effects in the relationship between the husband and the purchaser . On the other hand, an act implemented by the husband outside the limits of his powers cannot give rise to an action for damages against him by his co-contractor .

By analogy with the exceeding of powers, the courts have held that the principal has the possibility of ratifying what has been done without an agency agreement . Accordingly, in several rulings concerning irregularities affecting the contractual representation of a party to a notarial deed, and in particular the lack of authority of the person representing them in the notarial deed, for want of being a notary's clerk contrary to the terms of the power of attorney, the Court of Cassation has specified that these irregularities “are sanctioned by the relative invalidity of the act performed on behalf of the represented party, who alone may seek it, unless he ratifies what has been done for him outside or without an agency agreement, under the terms laid down in Article 1998 paragraph 2 of the Civil Code” .

Article 1156 of the Civil Code now sanctions lack of authority - as well as the exceeding of authority - by rendering the act unenforceable against the principal, unless the contracting third party has legitimately believed in the reality of the representative's authority. In this case, the contracting third party may invoke the invalidity of the deed, bearing in mind that neither the unenforceability nor the invalidity of the deed can be invoked once the principal has ratified it.

There is, however, an exception to the invalidity or unenforceability of an instrument implemented without an agency agreement, which requires the agent to honor his or her commitments to third parties. Article L. 511-5 of the Commercial Code states in effect: “Anyone who signs a bill of exchange as the representative of a person for whom he had no authority to act, is himself obliged by virtue of the bill and, if he has paid, has the same rights as the alleged principal would have had. The same applies to a representative who has exceeded his powers”. Thus, according to the Court of Cassation, a partner who signs a bill of exchange in the name of the undertaking, even though he has no such authority, is personally committed vis-à-vis third parties . Likewise, the signing of an endorsement by a merchant without any other mention is sufficient to bind him personally, without it being necessary to determine whether he acted as an agent. Consequently, a court of appeal cannot accept that the signature of an endorsement by a corporate officer without any other mention does not commit him personally, if the latter proves by all means that he gave his signature in this capacity, whereas in the absence of any element accompanying the signature of the endorsee, the latter alone was bound, without there being any need to investigate whether he acted in the capacity as an agent .

Cass. 2e civ, 13 June 2013, LawLex202200008891JBJ, stating that the lack of authority of a person appearing in the lawsuit as the representative of a legal entity constitutes a material irregularity affecting the validity of the deed.

Cass. 3e civ, 7 December 2011, LawLex202300013710JBJ; 26 January 2017, LawLex202200008653JBJ. See previously Cass. 1re civ. 25 May 1992, LawLex202200009638JBJ; 2 November 2005, LawLex202200008473JBJ, stating that the invalidity of a contract due to the agent's lack of authority, which is relative, can only be claimed by the represented party. 

Cass. 1re civ, 9 July 2009, LawLex202200009466JBJ.

Cass. 1re civ, 12 November 2015, LawLex202100003188JBJ.

Cass. 1re civ, 11 January 1983, LawLex202200002181JBJ.

Cass. 1re civ, March 28 1984, LawLex202200002184JBJ. See, for example, Cass. 1re civ. 24 March 1981, LawLex202300011835JBJ; Cass. 1re civ. 11 January 1983, LawLex202200002181JBJ.

CA Douai, 8 July 2021, LawLex202300008559JBJ.

Cass. 1st civ, 2 July 2014, LawLex202300008264JBJ; 9 July 2015, LawLex202300008057JBJ, holding that a court of appeal cannot annul a real estate seizure procedure and order the withdrawal of a payment order issued to a borrower, after noting that the loan deed had been stamped by a notary's secretary lacking any authority, on the grounds that the provisions of Article 1998, paragraph 2, of the Civil Code do not apply, as it concerns a lack of authority and not the exceeding of authority, and secondly, that while a deed affected by relative invalidity may be ratified, confirmation of an invalid deed requires both knowledge of the defect and the intention to remedy it, whereas irregularities affecting the contractual representation of a party to a notarial deed, are sanctioned by the relative invalidity of the deed carried out on behalf of the represented party, unless the latter ratifies what has been done for him/her outside or without an agency agreement, in accordance with the terms of Article 1998 paragraph 2, of the Civil Code.  

Cass. com. 29 March 1977, LawLex202300004686JBJ.

Cass. com. 6 October 1998, LawLex202300014314JBJ.

Business Contracts

502. Lack of authority

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502. Lack of authority

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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