The Liability Of Unauthorized Agent In The Narrow Sense

The establishment of agency system makes it possible that people could dealwith transactions with the agent's help other than doing it by their own hands, whichbenefits the efficiency and fast of business. However, if the agent trades with thethird party who believes that he had the authorities while he actually had not in thecase, there probably comes to the situation of unauthorized agency in the narrowsense. In order to protect the benefits of the third party as well as the balance of thebusiness market, the law has provided the liability of the unauthorized agent in theGeneral Principles of the Civil Law and the Contract Law in China. Though thereare many articles could be seen in civil laws, the formulation of these provisions arestill too vague to get the very idea into shape. It results in the consequence that thereare many arguments about the nature, constituent, content and amount ofcompensation of the liability in academic circle as well as in the legal practice. Thisthesis is going to discuss the system construction of the liability of unauthorizedagent in the narrow sense, provide solutions of the problems met in the legislatorand judicial practice with comparing theories and legislative thinking of countriesand areas abroad and pointing out the defect in the civil law positive. There are threeparts constructed the whole thesis. Part One discusses the legislation defect of the liability of unauthorized agent inthe narrow sense in the civil law provisions as well as the constituent of the liability.It comes out from a case, which had been heard from the subordinate court andintermediate court respectively in the judicial practice. The problems exist in thecase are caused by the provisions that are too vague to clarify the liability, includingits nature, constituent, content and the amount of compensation. The consequence oflacking confirmation subsequently by the principle is different in the GeneralPrinciple of Civil Law and the Contract Law, which provides treating it as a refusalwhile the other reverses. Also, the right of the third party to cancel his act to theunauthorized agent is REVOCATION in the provisions, while the right should beWITHDRAWAL in the eyes of the professors in colleges. Then thesis continues todiscuss the constituent of the liability of the authorized agent in the narrow sense,which should be constructed with four important parts: I. The legal act ofunauthorized agency in the narrow sense; II. The refusal that not confirm the agencyact by the principle; III. No withdrawal from the third party who does not know thelack of title; IV. The agent meets his capacity of legal conduct to do the unauthorizedagency.Part Two is going to discuss the theories about the nature of the liability ofunauthorized agent in the narrow sense and the observation of different legislativerules of countries and areas abroad. There are five main theories about the nature ofthe liability of unauthorized agent in academic. They are Contract Theory, TortTheory, Cupla in Contrahendo Theory, Implied Warranty of Authority Theory andLegal Obligation Theory. After the comparison of the history, meaning andconnotation of these theories, the Legal Obligation Theory is seemed to be the bestone among them, for it not only meets the need of equitable and trust, but also fixesthe provisions of the current legislation in China. On the legislation comparison part,the legislative rules of Germany, Switzerland, Japan, France and Taiwan District areintroduced in the thesis. Their regulations will be analyzed and benefits and shortages will also be compared among these rules in order to provide references tothe further regulation of the legislation of unauthorized agent's liability in the civillaw system of China.Part Three is going to discuss the arguments in the academic theories and theproblems exist in the legal practice on the liability of unauthorized agent, and finallyprovide solutions about the content and amount of compensation of the liability onthe basis of those above. After the comparison of the academic viewpoints and thepractice of judicial office, a deviation has been found: the academics prefer to agreethe Legal Obligation Theory while judges often decide on the basis of Cupla inContrahendo Theory. In order to correct the defect in legal practice, there should bemore specific provisions on the problems of liability of unauthorized agent in thenarrow sense. The liability should be prescribed as compensation for damages, whilethe agent has no right to perform the contract, for the result of protecting the benefitof economy and trade. The amount of compensation should be decided by thesubject of the unauthorized agent because of the call of just nature and the benefit ofthe third party. If the unauthorized agent intends to lie to the third party, he willsustain the damage compensation of what the third party should get when thecontract is performed. Otherwise, he will only bear the damage of what the thirdparty had already paid for the contract.