Understanding Rights and Obligations in Commission Agency Contracts

Lecture 3 Rights and obligations under contract of commission agency Introduction: The contract of commission agency creates reciprocal obligations between the principal and the commission agent. As the commission agency is a type of a commercial agency, the rights and obligations of the parties are those attached to the commercial agency, in addition to the special provisions stipulated by the commercial legislator; the rights and obligations which are confined to the parties of the contract, but extended to their relationship with the third party, in addition to the securities availed by law for each party against other parties.

Lecture 3 Rights and obligations under contract of commission agency Q : Discuss Obligations of the Commission Agent ? 1. Performing the functions commission agent by the principal: the commission agent is obligated to duly conduct the functions entrusted to him by the principal without exceeding the principal's instructions; otherwise, the commission agent shall be held liable for exceeding the authorities "as instructed". Nevertheless, it will be an acceptable practice for the commission agent to exceed the boundaries of instruction put to him in cases where he "enters into a contract with better conditions than those fixed by the principal ". entrusted to the

Lecture 3 Rights and obligations under contract of commission agency However, exceeding the principal's instructions invites the need to carefully examine the principal's instruction, which may be given to the commission agent either as obligatory, indicatives, or a mixture of the two as follows: a. The Obligatory Instructions: by such instructions the principal does not leave the agent a wide space to perform the agency as he wishes, rather, he is obliged to take such instructions by the letter, especially if such instructions are relevant to the nature of the transaction he is required to perform. Such restriction, however, does not imply that the agent will be denied any opportunity to perform the supplementary works necessary for the transaction, especially those dictated by practice. b. The Indicative Guidelines: the instructions in this case take the form of guidelines and directives, which the law permits the agent to exceed in case the latter was able to conclude the deal with better terms than those stipulated by the principal, provided that the agent submits an account for that deal to the principal. c. The Mixed Guidelines: in this respect the instructions are the mixture of the obligatory instructions and the indicative guidelines, to which the above is applicable.

Lecture 3 Rights and obligations under contract of commission agency As a general rule, however, the principal may refuse the transaction in all such cases where the agent violates the instructions, and where such refusal causes damage, the principal shall be entitled to claim a compensation in addition to his right of transaction; a right which is based on the contractual liability, like purchasing goods different in quality or in kind from that primarily fixed by the principal. rejecting the

Lecture 3 Rights and obligations under contract of commission agency 2- Preserving the Principal's Property: the commission agent is a trustee for the principal's property, which means that he will not be held liable for the loss of or damage to the property entrusted to him without his fault. In this respect, the commercial legislator in Bahrain provides that "The commission agent shall be liable for the damage or loss of the goods in his possession for the account of the principal unless such damage or loss arises from the force majeure or an inherent defect in the goods". .

Lecture 3 Rights and obligations under contract of commission agency 3- Keeping the Principal Informed: the civil legislator in Bahrain provides that the agent has, from time to time keeps the principal informed on the performance of the agency, and submits an account thereto. words, the agent is not permitted to conceal the information necessary for the principal to take a decision in respect of the transaction. In other