Business Contracts

Misuse of powers is not defined in Title XIII of Book III of the Civil Code, which governs agency agreements, but it does cover the situation where the agent concludes an act with a third party, in fraud of his principal's rights. In other words, the agent uses the powers conferred on him by his principal, not in the latter's interest, but in his own. 
An agent entrusted with an exclusive agency a …

Misuse of powers

Misuse of powers is not defined in Title XIII of Book III of the Civil Code, which governs agency agreements, but it does cover the situation where the agent concludes an act with a third party, in fraud of his principal's rights. In other words, the agent uses the powers conferred on him by his principal, not in the latter's interest, but in his own. 

An agent entrusted with an exclusive agency agreement to sell a property is guilty of misuse of powers towards his principal, when he rejects the tenants' offer to purchase the property for a much higher amount than that which he finally agrees to pay to a third-party undertaking with which he had fraudulently negotiated a promise to sell at the minimum price stipulated in the agency agreement , the agent who engaged in a series of fraudulent transactions to the harm of multiple owners, consisting of purported sales of their vehicles, the sale prices being collected and retained and the vehicles never delivered or returned to the owners, and sometimes being the subject of a second sale or becoming untraceable , or the agent of a co-owner at a general meeting who goes against the instructions of his principal .  

In the event of misuse of powers, the principal can of course sue the agent in contractual liability. Furthermore, according to case law, any commitments entered into by the agent as a result of a fraudulent agreement with a third party cannot be enforced against the principal . Conversely, acts entered into by an agent who has misused his or her powers commit the principal to third parties acting in good faith, from whom he or she cannot obtain compensation. For example, the principal is not entitled to claim compensation from the managing agent, who does not have the power to prevent a co-owner's agent at a general meeting from casting a vote contrary to the instructions expressed in the agent's mandate . 

Since the Ordinance of 10 February 2016, the Civil Code has governed representation within the framework of the ordinary civil law of contracts. According to current Article 1157 of the Civil Code: “Where the representative misuses his powers to the detriment of the principal, the latter may invoke the invalidity of the act performed if the third party was aware of the misuse or could not have been unaware of it”, it being specified that “misuse of power is understood to mean a representative who acts well within the limits of his powers but uses them for a purpose other than that agreed or provided for by law” . In a decision dated 29 March 2023, the first civil chamber of the Court of Cassation made an initial application of the provisions of Article 1157 of the Civil Code, while affirming, in the light of Article 1998 of the Civil Code, that even when the agent misuses his powers to the detriment of the principal, the commitments made by the agent to a third party bind the principal, unless the third party was aware of the misuse or could not have been unaware of it . 

Cass. 3e civ, 29 November 1972, LawLex202300013711JBJ.

Cass. 1st civ. 29 March 2023, LawLex202300004686JBJ.

Cass. 3e civ, 8 September 2016, LawLex202200009334JBJ.

Report to the President of the Republic on Ordinance No 2016-131 of 10 February 2016 reforming the law of contracts, the general regime and proof of obligations.

Cass. 1re civ, 29 March 2023, LawLex202300004686JBJ.

Business Contracts

500. Misuse of powers

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

500. Misuse of powers

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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