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ž 2.1. Institute “agency” in Scotland: concept, sphere of action of agents and their power

The agent - the person who is authorised to operate in interests and under the commission (act for and on behalf of) other person (principal) to enter contractual relations with the third parties; the agent representing the principal, creates, changes and ceases contractual legal relationships between the principal and the third parties.

[197]

Not all aspects of the brokerage contract are covered by the given short definition, but it embodies a brokerage contract essence, namely, possibility to create and change legal relation for other person. In exchange for payment of compensation the principal can take advantage of the professional competence of the agent of sphere of the coordination of treaty provisions. The principal can appoint the agent who is abroad that will allow the principal to take advantage of special knowledge of market conditions which the agent possesses. The international aspect of brokerage contracts is especially important, especially from the moment of acceptance of the Instruction on coordination of the legislation of the countries - of the participants, 1986 concerning private commercial agents (Council Directive on the Coordination of the Laws of the Member States Relating to SelfEmployed Commercial Agents 1986) [198 [199], which has been installed in the Great Britain by Regulations about commercial agents of 1993 (The Commercial Agents (Council Directive) Regulations 1993) 199. The regulations are directed on protection of commercial agents. Its influence on the Scottish right within the limits of regulation of brokerage contracts was considerable. [200]

Expansion of agency powers is important

Circumstance. If the agent exceeds the powers, it can threaten the contract validity (jeopardise the validity of the contract), which agent has concluded on behalf of the principal. In certain circumstances the contract can be recognised

Valid if, for example, the agent can rely on (visible) powers reasonably assumed according to circumstances (apparent authority) or if the principal approves actions of the agent in appropriate way. Nevertheless, whether to establish the principal or the agent the rights and duties under the contract possesses, which agent intended to conclude on behalf of the principal with the third parties, often causes certain difficulties. The line of action of the agent is extremely important. The parties and their obligations within the limits of the concluded contract will depend on quantity of the information given by the agent to the third party. Such questions, whether as clearly the agent has let know to the third parties, that it operates on the instructions of the principal, and whether the agent has informed on the person of the principal, define contractual relations. [201]

The contract of agency (mandate) differs from the brokerage contract that is the gratuitous contract. The principal (mandant)

The attorney (mandatary) - to the agent is equivalent to the principal, and. Many rights and duties of the attorney are similar to the rights and duties of the agent. The contract on rendering of legal services (on representation of interests in court) (advocate’s contract) is a version of the contract of agency

(contract of mandate) in spite of the fact that the person representing other person in court, will not work бесплатно.202

The volume of the potential rights (legal capacity) (extend of capacity) the agent and the principal, necessary for making contract, is object of a considerable quantity of doubts. Considering, that the agent is the representative of the principal, the principal cannot expand the capacity to conclude treaties (contractual capacity) by means of hiring of the agent. The principal who does not possess capacity to conclude treaties, cannot appoint the agent and will not be connected by treaty obligations under the contract, which agent intended to conclude on the instructions of the principal.

Capacity to conclude treaties of the agent much more a complicated question. Absence of capacity to conclude treaties of the agent is not a defining question in its actions on the instructions of the principal. As a matter of fact, the agent represents the carrier of the rights of the principal, the mechanism by means of which the principal can conclude the contract with the third parties. Absence of capacity to conclude treaties of the agent does not influence the contract validity. Absence of the legal capacity of the agent can call into question into the contract validity in case the third party approves, that the contract has been concluded between it and the agent. It can occur in case the agent operates on the instructions of the undisclosed principal (on behalf of an un disclosed principal).203

The principal and the agent can conclude the written contract, and as it is established by Regulations about the commercial agent of 1993, any party has the right to receive from another on the basis of inquiry the written document with the signature which contains all conditions of the brokerage contract, [202 [203]

Including separately adjusted conditions. [204] if the contract does not come within the purview of Regulations of 1993 the written contract is not the obligatory requirement, verbal agreement suffices. In most cases the principal and the agent conclude the written contract.

Possibly, it is more correct to define the brokerage contract as legal relation on which basis the principal appoints the agent to operate under the commission. The offer and the acceptance for the conclusion of the given kind of the contract are not required, it is enough to agent to start to operate on the instructions of the principal from its consent. As for the brokerage contract conclusion the considerable quantity of formalities is not required, the brokerage contract concept is often used for the decision of difficulties in other areas of legal regulation. [205 one of last examples is the principle ad hoc agency which is applied in order to avoid negative consequences of strict following to the doctrine of the legal person of the companies (the doctrine of the separate legal personality of companies [206]).

The regulations about commercial agents of 1993 regulate actions of commercial agents in the Great Britain irrespective of them

Nationalities. The purpose of the Instruction on commercial agents of 1986 which as it was mentioned earlier, has been installed in territory of the Great Britain by means of Regulations about commercial agents 1993

Year, there was a necessity to extend the improved working conditions and standards of a life of the workers, fixed in the Roman contract of 1957 (Treaty of Rome 1957) 201. Also it is necessary to notice, that the preamble of the Instruction on commercial agents of 1986 established necessity of harmonisation of regulation of agency relations for the purpose of unification of their protection in territory of the European Union. [207 [208] regulation is characterised by high degree of protection of the rights of commercial agents. Such approach strongly differs from traditional regulation of agency relations in England and Scotland where the principal is considered the party of the contract for which protection is necessary, in particular because of propensity of agents to conclude dogovory for which conclusion they do not have powers. It is not surprising, that application of Regulations of 1993 in English and Scottish vessels has been interfaced to certain difficulties. [209] Even now, after more than 20 years of coming into force of Regulations, the situation has not exchanged. Regulations application, besides, becomes complicated that some conditions can be excluded from the contract under the agreement of parties while others - are obligatory. Each position is necessary for checking on its compulsion.

In Regulations about commercial agents of 1993 the commercial agent is defined as the independent intermediary (self-employed intermediary) which possesses powers proceeding in time to adjust purchase or sale on the instructions of other person (principal) or to adjust and conclude the contract of purchase or

Sales of the goods for and on behalf of this principal (on behalf of and in the name of) [210]

The physical person, the company and partnership can be the commercial agent. Definition includes only dogovory purchase and sale of the goods, excepting agents who render services. The commercial agent should possess proceeding in time to powers (continuing authority), that excludes agents who are hired for the conclusion of one transaction. Also, considering, that for making contract the commercial agent is obliged to operate on behalf of the principal, actions of the agent on the instructions of the undisclosed principal (undisclosed principal), will not fall under regulation of Regulations 1993. Actions of the agent on the instructions of the undisclosed principal of a name are supposed in the Great Britain, unlike other Europe. By [211] case law also it is fixed, that the agent will be considered as the commercial agent only in case of presence of direct contractual relations. [212]

Agents who adjust treaty provisions (negotiate) fall under definition of commercial agents only. The Case law shows, that for definition of concept of "coordination" (negotiation) the Oxford English dictionary for the purpose of an exception of definition of the commercial agent of certain categories of agents is used. [213]

Certain businessmen directly are excluded from definition of the commercial agent, for example, operating in interests of the firm an orchestra hired for settlement of an inconsistency and bankruptcy the worker, the no-charge agent and others. [214] regulations do not regulate action of the agent if such actions are classified as "minor" (secondary). Definition of concept of "minority" is left on the discretion of EU member states. The Scottish and English courts interpreted the made definition differently. The modern approach at interpretation of the given definition in Scotland can be formulated as follows: crucial importance has the contract purpose between the agent and the principal at the moment of the introduction of the contract into force. It is considered the main thing a question, whether the agent is involved in formation of business reputation of the enterprise of the principal (engaged to develop goodwill in the principal’s business). If the answer to this question positive the role of the agent is not minor and it, hence, gets under definition of the commercial agent. As a whole, the difference of interpretation of "minority" in England and Scotland is the important question as too wide definition accepted in Scotland, increases quantity of agents which get under definition of commercial agents according to Regulations of 1993. [215]

As it was marked earlier, definition of powers of the agent has the big influence on an overall objective of the agent - an establishment of contractual relations between the principal and the third parties. The best variant is presence of the signed contract between the agent and the principal in whom powers of the agent are fixed in an explicit form. The given situation not always takes place. Powers of the agent can be meant (implied) which definition occurs in the various ways. The case law can help with definition were or not certain actions within the limits of meant powers. For definition of meant powers it is important to understand a difference between the general (general agent) and the special agent (special agent). The basic agent - the agent hired for conducting of all affairs of the principal. The special agent - the agent hired for the conclusion of the certain contract. [216 [217] [218]

The concept of the commercial agent fixed by Regulations of 1993, does not include many kinds of agents, including, agents who work in sphere of services, instead of the goods. Historically, agents named factors (factors) or brokers (brokers). The difference between factors and brokers became less significant recently. The term "factor" use for the description of the agents involved in management by the succession or management by debts (factoring of heritage property or debt factoring) 211 Concept "commercial agent" (mercantile agent) has got especial value after an adoption of law about factors of 1889 (Factors Act 1889 applied by the Factors (Scotland) Act 1890) 2n. The Commercial agent is defined as the agent, which within the limits of the developed practice of a business turn (customary course of business) possesses powers to sell the goods to send the goods for the purpose of its sale, to buy the goods and other similar powers. [219] Law of 1889 such agent is allocated by power to transfer a title to the goods of the principal even if the principal has not adjusted earlier and would not adjust the concrete agreement. If the commercial agent has documents on a title or he owns the goods any purchase and sale, pledge or other alienation of the goods within the limits of usual practice of a business turn it will be valid even without obviously expressed consent of the principal. Hence, the third parties should not ask a question of powers with the assistance of the commercial agent, under condition of conscientiousness. [220] law of 1889 to buyers gave the remedies at law similar with fixed in Law on purchase and sale of 1979.

Positions of the Law on factors of 1889 are an example how the agent behind frameworks of the powers can conclude the valid contract on the instructions of the principal. The purpose of the given positions is protection of the third parties against abusing the powers.

If the agent intends to conclude the contract with excess of the powers, the contract between the principal and the third party will not be concluded. However, the principal can approve (ratify) actions of the agent. The approval which is standing good in law, creates legal relations between the principal and the third party at the moment of intention of the agent to conclude the contract. Approval - unilateral action from the principal also can be both obviously expressed, and meant (appearing of actions of the principal). The principal can approve the concrete agreement or actions of the person which its agent was not earlier. For the approval which is standing good in law, performance of certain conditions of which it will be a question more low is necessary. [221]

The principal should exist at the moment of making contract on its commissions. As an example invalidity of the contract can serve at its conclusion before the state registration of the legal person. The principal should possess the legal capacity both at the moment of making contract, and at the moment of approval of actions of the agent exceeding its powers.

The requirement to the legal capacity of the principal has especially great value in the corporate right. Earlier dogovory, signed by directors or the agent on behalf of the company which are not specified in articles of the memorandum about association (objects clause), that is in constituent instruments, cannot be approved shareholders. In this case, neither the third parties, nor the company will not be connected by treaty obligations. It is very important to distinguish dogovory, prisoners with excess or infringement of authorised powers (constitutional powers) the companies and directors. As to the company legal capacity it is meant, therefore the contract will connect obligations the company. Actions of the agent with excess of power should be approved the special resolution (special resolution). If the third parties operated honesty, diggings will be connected

Treaty obligations in case of excess of power

222

The director. [222]

In cases when approval of the principal as a matter of fact creates agency legal relations, the agent should sign the contract with the third parties as the agent, instead of on its own behalf. Whether the agent of the principal names or operates on behalf of the undisclosed principal of value has no, but instructions on presence of the principal necessarily. If action of the agent which is necessary for approving, has time restrictions, the principal should approve it in the established time interval. The actions demanding of approval when due hereunder, are not established, also as well as principles of their definition. How to define terms and actions, term for which it is critical, does not follow and from a case law. The English right provides, that term matters only in cases when it is essential to action which is necessary for finishing in this term. [223]

Contract approval can be regulated with obvious predisposition to protection of interests of the third parties. Till now the Scottish right, unlike English, does not testify to development of the general rule which does not suppose approval in case of unfair injury to the third parties. Though it seems obvious, that the court of Scotland will make the decision according to the English right. [224]

The agent operating outside of the powers (unauthorized agent acting outside his authority), cannot connect the principal treaty obligations. If approval is admissible, the contract between the principal and the third parties can be recognised by valid. Nevertheless, there are other ways of protection of the third parties from actions of agents without corresponding powers. There is, for example, a concept of visible powers (ostensible or apparent authority). The given concept forbids the principal to operate inconsistently, namely, at first to make impression about presence at the agent of corresponding powers, and then to deny their presence. If the third party proves presence of imaginary powers, the agent will not be connected by obligations and the contract will not be recognised by valid. Instead of it, the third party can demand that to the principal will forbid to refer to defect of authority at the agent and the third party can demand the indemnification. The concept of imaginary powers has a certain set of requirements: the principal should make impression words or actions, between act or omission of the principal and belief of the third party in powers of the agent should be causally - investigatory communication, the third party should count on presence of corresponding powers and to incur because of it losses. [225]

The brokerage contract purpose is the establishment of contractual relations between the principal and the third party. Nevertheless, in certain cases contractual relations can arise between the agent and the third party. For an establishment of the parties of the contract the court should start with intention of the parties. Often it is underlined, that for definition of the parties of the contract it is necessary to establish, whether there was at the third party an intention to trust (intended to give credit) to the principal or the agent. [226] also it is important to define, what information on the principal the third party at the moment of making contract possessed. Following situations can take place:

1) the Agent opens, that operates on behalf of the named principal (for a disclosed and named principal);

2) the agent opens, that operates on behalf of the principal, but does not name it (for a disclosed and unnamed principal);

3) the agent does not open, that operates on behalf of the principal (for an undisclosed principal).

If the agent opens to the third party the fact of that it operates on behalf of the principal, and also names the principal, the general rule is, that the contract consists between the principal and the third party. The agent in this case will not be connected by obligations. Nevertheless, the specified general rule can be not applicable, if the return is proved. [227]

In a situation when the agent opens to the third party the fact of that it operates on behalf of the principal, but does not name the principal represents most a difficult situation because in the right of Scotland regulation of the given question is extremely limited. [228] party of the contract concluded with the third party, it is possible to define according to the general rule resulted earlier. To define the contract party it is possible also, using the choice doctrine (doctrine of election). The Third party has the right to make demands in court and to the principal, and the agent, but this person should choose, who from them will bear responsibility. [229]

If the agent plays a role of the representative and does not open the role to the third party the third party (not knowing about existence of the principal) considers that concludes the contract with the agent. After making contract and during all term of its action the principal can open the third person the fact of the existence [230] and show claims to the third party directly. The Third party, in turn, after disclosing of the principal has the rights to choose (only one of two and it is definitive) whom to represent the right to suing. [231]

Not always the principal can operate, not opening itself. If positions or the general sense of the contract exclude possibility of participation of other party of the contract the agent cannot conclude the contract on behalf of the principal, not opening it. [232] defining will be a question, whether has allowed to understand the third party that does not wish to conclude the contract with any other person that will be defined on the basis of positions of the concrete contract, proceeding from concrete circumstances. [233]

Probably, that to the principal which existence has not been opened, is not permitted to interfere with the contractual relation (prevent from interventing) at which conclusion intentionally it has not been informed on its existence. Parametres of the contract for such interdiction the indistinct.

It is necessary to notice, that if the contract is concluded taking into account any skills of the agent the principal should not participate in the contract. [234]

If the agent exceeds the powers and the principal cannot approve action of the agent between the principal and the third party the contract is not considered the prisoner. Nevertheless, the agent can bear the personal responsibility, for example, if it operated on behalf of the nonexistent principal or the principal does not possess the legal capacity to conclude the contract. However the general rule in this respect does not exist. If the agent who does not have powers, concludes the contract ostensibly on behalf of the principal the agent will be connected by treaty obligations. [235]

In case of excess by the agent of the powers the contract can be not recognised by the prisoner. Nevertheless, it does not mean, that the third party which has suffered from actions of the agent, has no remedies at law. The third party can bring an action on the basis of visible powers (apparent authority) the agent. Other variant is to bring an action on the basis of that the agent informs the third party a false information that operates within the limits of the powers in interests of the principal (breach of warranty of authority). The second variant of protection of the rights the third party seldom met in pravoprimenitelnoj to practice of Scotland. It is probable, because financial positions of the principal does its more attractive from the point of view of the third party indemnification. [236]

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A source: Afanaseva Taisija Aleksandrovna. LEGAL REGULATION OF RELATIONS OF THE TRADING TURN In Scotland. The dissertation on competition of degree of the master of laws. Moscow, 2017. 2017

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