The unpublished second report of the Lando Commission on The Principles of European Contract Law ('the Principles' or 'PECL') contains an important recent attempt to harmonise the laws of agency of European jurisdictions. Chapter 3 of the Principles deals with 'Authority of Agents'. Following the civil law model, Article 3:102 PECL distinguishes between direct and indirect representation.
Direct representation exists where an agent acts 'in the name of' a principal (Art. 3:102(1) PECL). If the agent acts within the scope of his authority (real or apparent), his acts bind the principal and third party directly; the agent drops out. Indirect representation covers two types of case in which a principal enlists the assistance of an intermediary to act for him in transactions with third parties (Art. 3:102(2) PECL). The first can be termed 'undisclosed agency'. In these cases, the principal confers authority on the intermediary to create privity between him (the principal) and third parties. As it happens, however, the third party neither knows nor has reason to know that the intermediary acts as an agent. The second category of indirect representation can for convenience be termed 'commission agency'. In this case, by contrast, the principal does not confer authority on the intermediary to create privity of contract between him (the principal) and third parties. The intermediary is to act 'in his own name': he is to contract with third parties in a personal capacity. In both cases of indirect representation, intermediary and third party are bound to each other; principal and third party are not (Art. 3:301 PECL). Even so, in two situations the principal is entitled to exercise against the third party the rights that are acquired on his behalf by the intermediary: if the intermediary goes bankrupt or is guilty of a fundamental non-performance of his duties to the principal (Art. 3:302 PECL). The third party is entitled, in similar circumstances, to exercise against the principal the rights that the third party has against the intermediary (Art. 3:303 PECL).European Review of Private Law