Business Contracts

According to article 1994, paragraph 1, of the Civil Code, the agent is responsible for the person he has substituted for himself in the management, on the one hand, when “he has not been granted the power to appoint someone else” and, on the other hand, when “this power has been conferred on him without designation of a person”, and he has chosen a person who is “notoriously incapable or insolven …

Effects

According to article 1994, paragraph 1, of the Civil Code, the agent is responsible for the person he has substituted for himself in the management, on the one hand, when “he has not been granted the power to appoint someone else” and, on the other hand, when “this power has been conferred on him without designation of a person”, and he has chosen a person who is “notoriously incapable or insolvent”.

While the courts have readily accepted the principle of substitution, even when it has not been expressly authorized by the principal, they have nevertheless narrowly defined its effects. According to the Court of Cassation, an agent who has appointed an undertaking to carry out a mission entrusted to him by the principal, whom he has informed, and who has not objected, is responsible for the management of the sub-agent . On the other hand, in accordance with the provisions of Article 1994, paragraph 1, the agent's obligation to answer to his principal for the establishment he has substituted for himself is seriously contestable, when the latter has authorized the substitution and designated the person of the substitute . Thus, according to case law, the carrier, as sub-agent, commits a fault which engages the agent's liability towards the principal, when he accepts and transmits a bill of exchange for the agreed amount of the goods, whereas in the absence of any stipulation to the contrary, the transport was subject to a standard courier contract, under which the carrier was only required to deliver the goods in return for the remittance of a check or cash . The Court of Cassation has ruled that an agent who has subcontracted a third party to carry out his or her mission, even with the principal's authorization, remains bound by a duty of oversight towards the subcontracted agent, to ensure proper performance of the agreement. Thus, a travel agency must be declared fully liable for damage caused to customers during transport abroad carried out on the initiative of a local correspondent, since, as agent, it failed in its obligation to ensure that the measures taken by its substitute agent were carried out in conditions of adequate safety . Moreover, the Court of Cassation considers that the agent cannot reproach the substitute agent for having obeyed an instruction from the principal .

Article 1994, paragraph 2, also states: "In all cases, the principal may take direct action against the person whom the agent has replaced . The courts have drawn several conclusions from this article. Firstly, it ensues from Article 1994 of the Civil Code that the substitution of an agent without the principal's authorization has the effect of rendering the original agent liable for the acts of the person he has substituted, against whom the principal may take direct action, although the substituted agent can only be held liable if he or she has committed a fault. Consequently, an agent substituted without the principal's consent, who has faithfully carried out the instructions of the original agent whose liability has not been upheld, cannot be held liable to the principal in the absence of fault . On the other hand, the Court has ruled that, in accordance with Article 1994, paragraph 2, a substitute agent who fails to ensure that the person to whom he remits the funds intended for the principal has all the necessary guarantees is liable to the principal . In application of these provisions, the principal has a direct right of action against the substitute agent, even if the latter believed that he was acting on behalf of the original agent and not on behalf of the principal . Where the principal takes direct action, the international arbitration clause in the agency contract must be applied to the substitute agents . 

Secondly, according to case law, under Article 1994, paragraph 2 of the Civil Code, it is the principal's responsibility to pay commissions to the substitute agent  so that the latter also has a personal and direct action against the principal to obtain reimbursement of his expenses and advances, as well as payment of the remuneration due  even in the case of a chain of substituted agents . The sub-agent may bring a direct action in all cases whether or not the substitution has been authorized by the principal . Accordingly, the principal cannot rely on the substitute agent for payments made to his agent, even if these payments were made prior to the exercise by the substitute agent of his own rights under Article 1994, paragraph 2, of the Civil Code . Nor does the sub-agent's failure to claim the amount of his advances and expenses deprive him of the direct action he is entitled to bring against the principal . On the other hand, the principal may legitimately assert a fault on the part of the substitute agent to limit the latter's right to reimbursement . However, the substitute agent has a direct action against the principal for reimbursement of his advances only to the extent that the agent's action is not itself extinguished . Accordingly, a court of appeal cannot reject a claim by the substitute agent for reimbursement by the principal of sums paid on his behalf, on the grounds that the agent had already received payment of his claim by the remittance of accepted bills of exchange before the substitute agent took action, without investigating whether the latter, by the demand for payment addressed to the principal, had not already exercised the direct action to which he was entitled . The Court of Cassation has also stated that when the agent acts in his own name, the substitute agent clearly does not have a direct action against the principal .

The preliminary draft reform of the law of special contracts  takes up the provisions of Article 1994 by codifying the direct action of the substitute agent, who “may claim directly from the principal the sums which remain due to him, provided that the latter has not already paid into the hands of the agent”. 

Cass. com. 2 December 1997, LawLex202300012528JBJ.

Cass. com, 10 May 2006, LawLex202300012518JBJ, overruled a court of appeal which held that, despite the fault committed by the substitute agent, who had made the transfer in question without any concern for the identity discrepancy between the proprietor of the credited account and the beneficiary designated by the principal, the original agent must answer to his principals for the establishment he substituted, even though the latter, which also holds the account where the disputed funds were to be credited, is an obligated intermediary, expressly referred to in the principal's transfer order, which not only authorizes the substitution, but also designates the person of the substitute.

Cass. com. June 28, 2002, LawLex200200004173JBJ. See also. Cass. 1re civ, November 14, 2013, LawLex202300012521JBJ, holding that a lawyer who has not merely recommended a colleague to a client, but has entrusted him with a case to be handled in Belgium, is bound, in accordance with the Professional Code applicable between lawyers in member countries of the EU, to pay the fees and expenses due to the latter, unless otherwise stipulated.

Cass. 1re civ, 27 December 1960, LawLex202300012680JBJ; Cass. com, 8 July 1986, LawLex202300012542JBJ: by virtue of paragraph 2 of Article 1994 of the Civil Code, the substitute agent has a direct and personal action against the principal to obtain reimbursement of the sums he has paid on his behalf; 4 December 1990, LawLex202300012543JBJ.

Cass. 1re civ., 28 October 1986, LawLex202300012523JBJ, specifying that since the sales agency agreement given to the initial agent complied with the provisions of the Hoguet Law of 2 January 1970 and its implementing decree, the fact that the sub-delegations granted by the latter to real estate professionals, and between these professionals, were not established in accordance with the terms of these texts were irrelevant, with the result that, once the chain of substitute agents has been established, the last sub-agent is entitled to bring an action for payment directly against the defaulting principal. 

Cass. com, 9 November 1987, LawLex202300012548JBJ; 20 June 1995, LawLex202300012228JBJ.

Cass. com, 9 November 1987, LawLex202300012548JBJ; 19 March 1991, LawLex202300012547JBJ; 5 October 1993, LawLex202300012549JBJ, censuring a court of appeal which had rejected the claim of the substitute agent for reimbursement by the principal of sums paid on his behalf, on the grounds that payment in good faith by the debtor to the creditor or the latter's representative extinguishes the obligation and consequently discharges its author, the principal is therefore not entitled to invoke against the substitute agent the payments made by him to the agent, even if these payments were made prior to the exercise by the substitute agent of his own rights under Article 1994, paragraph 2, of the Civil Code.

Cass. com. 19 March 1991, LawLex202300012547JBJ.

Cass. com. 25 June 1991, LawLex202300012551JBJ.

Cass. com. 3 December 2002, LawLex202300012544JBJ; Cass. 1re civ. 30 May 2006, LawLex202300012545JBJ.

Cass. com. 13 February 2007, LawLex202300012546JBJ.

Cass. com. 28 May 2002, LawLex202300012245JBJ.

Cass. com. 8 July 2003, LawLex202300012527JB.

Preliminary draft, Art. 2002: "The agent may, with the consent of the principal, substitute a third party in the performance of his mission. 

He is responsible for the person he has substituted. 

In all cases, the principal may take direct action against the third party substituted by the agent. 

Reciprocally, the substituted agent may claim directly from the principal any sums still owed to him,provided that the principal has not already made payment to the main agent".

Cass. 1re civ, May 29 1980, LawLex202300012530JBJ ; 29 January 1991, LawLex202300012532JBJ, holding that the organizer of a tour abroad who uses a local carrier remains bound by an obligation to supervise his substitute agent, and in particular to ensure that the transport is carried out in sufficiently safe conditions, He therefore engages his liability in the absence of an experienced representative in the bus involved in the accident, and insofar as it is established that the driver was driving at excessive speed on an unfamiliar road, and that on approaching a dangerous bend indicated by a sign, he failed to brake in time, thereby losing control of his vehicle.

Cass. 1re civ, 13 June 2006, LawLex202300012540JBJ, noting that a judicial commissioner does not incur liability towards the intermediary agent, in this case the wife of the original principal, from whom he received the mandate to sell furniture belonging to her husband, by proceeding with the sale, after having been informed of the latter's decision to revoke the agency agreement, since the husband had instructed him to continue the performance of the agency agreement received from his wife, the latter could not blame the substitute agent for having disobeyed this instruction, which was exclusive of the revocation of the agency agreement.

Cass. com., 8 April 1976, LawLex202300012522JBJ, for a bailment agreement concluded between a forwarding agent and a chamber of commerce which he had substituted to perform his agency, the latter having the status of sub-agent vis-à-vis the importer, so that the latter is entitled to bring an action against it, by way of direct action, pursuant to Article 1994, paragraph 2, of the Civil Code.

Cass. 1re civ, 26 November 1981, LawLex202300012526JBJ.

Cass. 1re civ., 23 January 1996, LawLex202300012533JBJ.

Cass. com. 14th October 1997, LawLex202300012541JBJ, specifying that the principal's right to act directly against the substituted agent, which he is entitled to by virtue of Article 1994, paragraph 2, of the Civil Code, does not depend on the latter's knowledge of the existence of the original agency agreement and of the substitution, i.e. on the fact that he knew or could not have been unaware that his principal was himself only an agent.

Cass, 1re civ, 8 February 2000, LawLex202300012534JBJ.

Business Contracts

488. Effects

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488. Effects

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Les notions juridiques connexes

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