Explanation of Article 486
The article refers to the first obligation of the obligations on the agent, which is not to exceed the limits of his agency. The article clarifies the scope within which the agent is entitled to act under his agency without being considered as exceeding its limits.
The first paragraph states that the agent is entitled, under the agency contract, to act in the following:
First: To act in the legal transactions mentioned in the agency.
Second: To perform necessary material acts according to the nature of the transaction, the intention of the contracting parties towards a specific method of execution, or customary practice.
For example: If a person appoints another to rent a house, the agent is entitled, under the agency contract, to act in renting, entering the leased property, handing over its keys, and other necessary acts related to the transaction, determined by the nature of the transaction, the intention of the contracting parties, and custom. However, the agent is not entitled to collect rent, sell the house, or mortgage it. Similarly, if appointed to sell a car in another country, the agent is entitled to act in selling and follow the sale transaction according to the contracting parties' intention to transfer the sold item to the country specified in the agency contract. The agent is obliged to perform the acts covered by the agency and its necessary consequences as an agent, not as an employee bound by an employment, contracting, or guarding contract. Consequently, the rules of these contracts do not apply to the acts performed by the agent. If the agent is injured while performing agency acts, the rules of worker injury in an employment contract do not apply; instead, the rules of agency apply.
The second paragraph states that what the agent receives from his principal's money is considered a deposit with him, and the rules of the deposit contract, as specified from Article (506) to (516), apply. As a result, the agent is not allowed to use his principal's money or create a right on it for others without permission; otherwise, the agent must compensate the principal for the damage. The agent is not allowed to deposit his principal's money with others without permission unless necessary, and he must retrieve it after the reason ceases. The agent is obliged to return what remains of his principal's money after the agency contract ends.
The third paragraph states that what is mentioned in the first paragraph about the agent's right to act within the agency does not mean that the agent cannot contract in a way that is more beneficial to the principal; this is not considered exceeding the limits of the agency. For instance, if a person appoints another to sell a house to a specific person for a deferred price, the agent can contract with the buyer for an immediate price or a closer term than specified in the agency if it is more beneficial to the principal, unless the principal has a purpose in specifying the agency, such as considering the buyer's condition.
Related To
Article 486
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An agent shall, pursuant to the power of attorney contract, be granted the right of disposition on all matters specified in the contract as well as any matter incidental thereto according to the nature of the disposition, the will of the contracting parties, and custom.
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Property received by the agent for the account of his principal shall be deemed a deposit.
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The agent shall not be deemed to have exceeded the limits of his power of attorney if the disposition he makes entails a greater benefit to the principal, unless such limits are intended by the principal.