Explanation of Article 503
The article refers to one of the reasons for the termination of the agency, which is the principal's dismissal of the agent; the principal may dismiss the agent from the agency, whether the agency is for a fee or without a fee. The principal may also restrict the powers granted to the agent. For instance, if the principal authorized the agent to sell, purchase, and receive the price, and then wanted to restrict it to selling and purchasing without receiving the price, the agent's powers would be limited to selling and purchasing without receiving the price.
The principal has the right to dismiss the agent and restrict his authority at any time he wishes, and the dismissal and restriction can be explicit or implicit. It is explicit when the principal explicitly states the dismissal of his agent, and it is implicit, for example, when the principal appoints another person for the task that can only be performed by one person, which implies implicit dismissal, and the same applies to restriction.
The principal's right to dismiss his agent and restrict him is limited in two cases. This article specifies the first case, which is when the agency is issued for the benefit of the agent or a third party. An example of an agency that involves the agent's interest is when co-owners appoint one of them to manage the common property; here, the agency is not only in the principal's interest but also in the agent's interest. An example of an agency involving a third party's interest is when a person is appointed to sell a house and receive its price to pay off a debt owed to a third party; here, the agency involves a right for the third party, who is the principal's creditor. When the agency is for the benefit of the agent or a third party, the principal cannot terminate the agency by dismissing the agent or restricting it without the consent of the interested party. If the interested party does not consent, the agency remains in effect, and the effect of the action is attributed to the principal.
The following article (496) refers to the second case. The article clarifies that the principal, in all cases, if he dismisses his agent or restricts his powers in the agency, must inform the agent of the dismissal or restriction. If the principal does not inform the agent of the dismissal or restriction, the dismissal or restriction does not take effect, and the agency remains in effect. If the agent contracts after being dismissed and before being informed with a person in good faith, the effect of the contract is attributed to the principal.
Related To
Article 503
The principal may, at any time, dismiss his agent or restrict his powers, unless the power of attorney is issued for the benefit of the agent or a third party; in such case, the principal may not dismiss or restrict the powers of the agent without the consent of the party for whose benefit the power of attorney is issued. In all cases, the principal shall notify the agent of the dismissal and restriction.