Contracts of commission, commission and agency
In accordance with paragraph 1 of Art. 971 CC under the contract of commission, one party (attorney) undertakes to perform certain legal actions on behalf and at the expense of the other party (principal). The rights and obligations of a transaction made by an attorney arise directly from the principal.
Agreement on legal nature- consensual and bilateral. As a general rule, this contract is recognized free of charge, if payment of remuneration to an attorney is not expressly provided for by law or contract. However, if this agreement is related to the implementation of entrepreneurial activity by at least one of its participants, it is, on the contrary, assumed onerous unless its gratuitous nature is fixed in the contract (clause 1 of Article 972 of the Civil Code). In addition, the contract of assignment refers to the number of personal accounts transactions, strong> are relatively rare in modern civil turnover.
The subject of the agreement instructions is the commission by one person on behalf of other specific legal actions, most often transactions. The law emphasizes that the rights and obligations of a transaction made by an attorney arise directly from the principal (clause 1 of article 971 of the Civil Code). Consequently, an attorney does not become a party to a transaction he or she has concluded with a third party, and such a party is represented by a principal.
Since the attorney is acting on behalf of another person, in this case, the representation takes place, in connection with which the said contract is also called the agreement on representation, and attorney-representative.
Representation, and therefore, the contract of commission, are possible in most civil legal relations (with the exception of those provided for in clause 4 of Article 182 of the Civil Code). In this regard, the parties to the contract of commission may be any capable citizens and legal entities, as well as public and legal entities. Only for commercial representatives there are restrictions, because in their role can only act as a commercial organization or individual entrepreneurs.
The law does not contain special rules on the form of the contract of assignment, proceeding from the fact that according to the general rule the relations of its participants are formalized by issuing powers of attorney. The power of attorney determining the scope of the attorney's be drawn up in accordance with the requirements of art. 185-187 Civil Code. As a written document, in most cases it does not presuppose (although it does not exclude) additional formalization of the commission relationship by a special document (agreement) signed by both parties. Commercial representation is carried out on the basis of a written contract, which may contain indications of the representative's authority (Paragraph 1, Clause 3, Clause 184 GK). In this case, the power of attorney to perform legal actions on behalf of the principal is not required.
The contract of commission can be concluded both for a certain period, and without specifying a term (clause 2 of Article 971 of the Civil Code). However, the powers of the attorney are usually fixed in power of attorney, the validity of which is limited by law (paragraph 1 of Article 186 of the Civil Code). In this regard, the contract of commission, concluded without indication of the term or for a period exceeding the validity period of the power of attorney issued for its execution (if the power of attorney is issued for three years), must be executed in the form of a written document.
The duty of the attorney is personal the execution of the assignment given to him. Trust is only permissible in cases and under the conditions provided for in Art. 187 Civil Code (clause 1 of Article 976 of the Civil Code), i.e. or in the presence of a special authority directly fixed in the power of attorney, or if the principal is forced to resort to confession by force of circumstances to protect the interests of the principal.
The attorney is obliged to perform the assignment given to him in accordance with the instructions of the principal. He has the right to depart from the instructions of the principal, if it is necessary in the interests of the principal himself and the attorney could not request the principal in advance or did not receive a response within a reasonable time to his request. But also in this case the client at the first opportunity should be notified by the attorney about the allowed retreat of the instructions given to him.
Commercial Representative may be entitled to retreat in the interests of the principal from his instructions without first requesting it. However, he, unless otherwise provided by the contract of commission, is also obliged to inform his principal about the deviations made (Article 973 of the Civil Code).
In addition, in accordance with Art. 974 CC attorney is obliged to:
• at the request of the principal to inform him of all the information on the progress of the execution of the assignment;
• without delay, transfer to the trustor all received from transactions executed in fulfillment of the order;
• upon execution of the instruction or upon termination of the contract of instruction prior to its execution without delay, return the power of attorney, the validity of which has not expired, and submit a report with the application of supporting documents, if required by the terms of the contract or the nature of the commission.
The principal must first of all properly formalize the powers of the attorney, i.e. give the latter a power of attorney to perform legal actions stipulated by the contract of commission. It is necessary that the instructions of the principal should be lawful, feasible and concrete (Article 973 G, paragraph 1), otherwise they will not bind the attorney.
Unless otherwise provided by the contract, the principal is also obliged:
• reimburse the attorney for the costs incurred;
• provide it with the means necessary to execute the assignment;
• without delay, accept from the attorney all the orders executed by him in accordance with the contract agreement;
• pay an attorney a fee if the contract of commission is compensated.
The commercial representative is given the right to retain things that are subject to transfer to the trustee, until the latter has fulfilled the obligations to compensate for the costs incurred by the attorney and to pay him a conditioned remuneration (clause 3 of Article 972, Article 359 of the Civil Code).
The relations of the parties to the contract of assignment are personal-trust (fiduciary). This is due to the presence of the norm of paragraph 2 of Art. 977 CC, according to which the principal has the right to cancel the commission, and the attorney refuses to at any time , without explaining the motives of his actions. The agreement to waive this right is void.
If the contract of assignment is terminated before the commission is performed by the attorney in full, the principal is obliged to reimburse the attorney for the costs incurred while executing the commission, and when the attorney was entitled to remuneration, also pay him remuneration commensurate with his work. This rule does not apply to the performance of an order by an attorney after he learned or should have learned about the termination of an order (clause 1, article 978 of the Civil Code).
The peculiarity of the contract of assignment as a contract based on confidential relations is also that in the case of unilateral refusal of its execution, the trustee and the attorney do not bear the obligation to reimburse the losses caused to them to the other party (clauses 2, 3 of Article 978 of the Civil Code) . As an exception, compensation is provided only to the trustee in case of refusal to execute the commission of the attorney in conditions when the principal is deprived of the opportunity to otherwise secure his interests.
Since for business relations fiduciarity is not a defining feature, the current legislation establishes more stringent rules governing unilateral refusal of a commercial representation agreement. In particular, in the event of the withdrawal of such an agreement as a general rule, the other party must be notified in advance not less than 30 days.
The personal-trusting nature of the relationship between the parties to the contract of assignment precludes the possibility of succession on their obligations.
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