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Agency in Comparative and Private International Law

Moll, Cecilia (2001)
Department of Law
Abstract
It is very common that business transactions, in particular internationally, are made through agents. It is therefore interesting and clearly relevant to be aware of the diversities in the agency laws of different countries. The major differences between the Swedish agency law on the one hand and the English and American on the other hand are encountered when focusing on how authority can be established. Since authority of an agent is required in order to conclude a binding contract between the principal and the third party this means that the agency laws differ also in the area of liability in contract. In English and American law authority is divided into actual and apparent authority depending on what has appeared in the eyes of the... (More)
It is very common that business transactions, in particular internationally, are made through agents. It is therefore interesting and clearly relevant to be aware of the diversities in the agency laws of different countries. The major differences between the Swedish agency law on the one hand and the English and American on the other hand are encountered when focusing on how authority can be established. Since authority of an agent is required in order to conclude a binding contract between the principal and the third party this means that the agency laws differ also in the area of liability in contract. In English and American law authority is divided into actual and apparent authority depending on what has appeared in the eyes of the third party. Appar-ent authority entails that the third party can reasonably assume that the agent has been given authority when the principal has held him out as if he did. This provides English and American agency law with an exception from the general rule that actual authority is based on the message to the agent only, irrespective of what the third party knows or does not know. In Swedish law on the other hand the most important element of authority, according to the general rule, is that the third party has received a message of authority from the principal. There is, however, an exception from this rule, called dependent authority, which has much in common with the notion actual authority in English and American law. This shows that both situations, i.e. holding out to the third party and a simple message to the agent, are recognised as grounds for authority although the general rule and the exception are reversed in Swedish law. Further, the doctrine of undisclosed principal is recognised in England and the U.S.A. This entails that there is a binding contract between the third party and the principal even when the former did not know that the agent was not acting for himself, but in the capacity of an agent. This is a much discussed feature of agency law, which is sometimes considered an anomaly since it is an obstruction to ordinary rules of contract law. Since Swedish law does not recognise this doctrine other categories of agents have been created and the general rule is that the commission agent and the bulvan cannot bind the principal since they are acting in their own names. Having mentioned some of the differences in agency law brings me to the core of this essay, namely what happens when there is a conflict of laws regarding an inter-national agency relationship. The Rome Convention does not cover the rela-tion between the principal and the third party and no other binding statutory rule can be found on this issue. Instead one has to consider different con-necting factors such as the place where the agent performs (lex loci actus) or the country where the agent or the principal have their busi-ness establish-ments or habitual residence. All suggestions in this essay in-clude advantages as well as disadvantages depending on whose interests one aims to preserve. The most appropriate connecting factor is probably not just one of these but a combination of at least two of them. For instance it has been argued that the country where the agent has his business estab-lishment could function especially well in combination with the lex loci actus. This is to say that the law of the country where the agent is estab-lished would determine whether the principal is bound in relation to the third party as long as it is reasonable to assume that the third party can ascertain which law this would be. If the agent does not have an established place of business or performs his acts in another country it may be more appropriate that the law of the country where the agent acts governs the question of authority. In a leading English textbook on private international law Dicey &amp&semic Morris (see further 3.1.6 and notes). it is suggested that the law that governs the main contract should also be applicable to the external relationship by way of consistency. Two advantages with this rule are that third party would be able to rely on the same law whether his problems relate to general contract matters or specific agency matters and also that it makes a choice of law affecting the external relationship possible. A dis-advantage with this suggested factor is that the principal may not be able to assess the applicable law if the connection to the main contract is fortuitous, which it may be for instance if the agent is given a wide sphere to act within. Another disadvantage is that the agent's conclusion of a contract may consist in several transac-tions resulting in different laws being applicable on each transaction. To sum up, the most important factors to keep in mind when assessing the value of a connecting factor are: the interests of the third party and to a lesser extent those of the principal&semic whether it is possible that the connecting factor is fortuitous&semic whether the connecting factor could have been fraudulently cho-sen by either party and whether the appointed governing law is foreseeable to the parties. (Less)
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author
Moll, Cecilia
supervisor
organization
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Internationell privaträtt, Komparativ rätt
language
English
id
1560255
date added to LUP
2010-03-08 15:55:26
date last changed
2010-03-08 15:55:26
@misc{1560255,
  abstract     = {It is very common that business transactions, in particular internationally, are made through agents. It is therefore interesting and clearly relevant to be aware of the diversities in the agency laws of different countries. The major differences between the Swedish agency law on the one hand and the English and American on the other hand are encountered when focusing on how authority can be established. Since authority of an agent is required in order to conclude a binding contract between the principal and the third party this means that the agency laws differ also in the area of liability in contract. In English and American law authority is divided into actual and apparent authority depending on what has appeared in the eyes of the third party. Appar-ent authority entails that the third party can reasonably assume that the agent has been given authority when the principal has held him out as if he did. This provides English and American agency law with an exception from the general rule that actual authority is based on the message to the agent only, irrespective of what the third party knows or does not know. In Swedish law on the other hand the most important element of authority, according to the general rule, is that the third party has received a message of authority from the principal. There is, however, an exception from this rule, called dependent authority, which has much in common with the notion actual authority in English and American law. This shows that both situations, i.e. holding out to the third party and a simple message to the agent, are recognised as grounds for authority although the general rule and the exception are reversed in Swedish law. Further, the doctrine of undisclosed principal is recognised in England and the U.S.A. This entails that there is a binding contract between the third party and the principal even when the former did not know that the agent was not acting for himself, but in the capacity of an agent. This is a much discussed feature of agency law, which is sometimes considered an anomaly since it is an obstruction to ordinary rules of contract law. Since Swedish law does not recognise this doctrine other categories of agents have been created and the general rule is that the commission agent and the bulvan cannot bind the principal since they are acting in their own names. Having mentioned some of the differences in agency law brings me to the core of this essay, namely what happens when there is a conflict of laws regarding an inter-national agency relationship. The Rome Convention does not cover the rela-tion between the principal and the third party and no other binding statutory rule can be found on this issue. Instead one has to consider different con-necting factors such as the place where the agent performs (lex loci actus) or the country where the agent or the principal have their busi-ness establish-ments or habitual residence. All suggestions in this essay in-clude advantages as well as disadvantages depending on whose interests one aims to preserve. The most appropriate connecting factor is probably not just one of these but a combination of at least two of them. For instance it has been argued that the country where the agent has his business estab-lishment could function especially well in combination with the lex loci actus. This is to say that the law of the country where the agent is estab-lished would determine whether the principal is bound in relation to the third party as long as it is reasonable to assume that the third party can ascertain which law this would be. If the agent does not have an established place of business or performs his acts in another country it may be more appropriate that the law of the country where the agent acts governs the question of authority. In a leading English textbook on private international law Dicey &amp&semic Morris (see further 3.1.6 and notes). it is suggested that the law that governs the main contract should also be applicable to the external relationship by way of consistency. Two advantages with this rule are that third party would be able to rely on the same law whether his problems relate to general contract matters or specific agency matters and also that it makes a choice of law affecting the external relationship possible. A dis-advantage with this suggested factor is that the principal may not be able to assess the applicable law if the connection to the main contract is fortuitous, which it may be for instance if the agent is given a wide sphere to act within. Another disadvantage is that the agent's conclusion of a contract may consist in several transac-tions resulting in different laws being applicable on each transaction. To sum up, the most important factors to keep in mind when assessing the value of a connecting factor are: the interests of the third party and to a lesser extent those of the principal&semic whether it is possible that the connecting factor is fortuitous&semic whether the connecting factor could have been fraudulently cho-sen by either party and whether the appointed governing law is foreseeable to the parties.},
  author       = {Moll, Cecilia},
  keyword      = {Internationell privaträtt,Komparativ rätt},
  language     = {eng},
  note         = {Student Paper},
  title        = {Agency in Comparative and Private International Law},
  year         = {2001},
}