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Civil Law

Explanation of Article 86

Explanation of Article 86

This article addresses the statement of "agency limits," which are: the powers granted by the principal to the agent. The article states that the limits of the agency are of two types:

  • First: "General Agency," which is: the agency that grants the agent general powers in all actions of the principal, such as: agency for sale, agency for purchase, agency for lease, and the like.

  • Second: "Special Agency," which is: the agency that grants the agent specific powers in certain actions, such as: agency for selling a specific car, agency for purchasing a specific property, agency for leasing a specific house, and the like.

It should be noted that the agency must be "explicit," meaning: the agency must be clear and decisive, with no ambiguity or hesitation. For example: the agency cannot be implicit, or conditional, or unknown.

Exceeding the limits of the agency results in the "nullity of the contract," which has no legal effect, except in the cases exempted by the article, which are:

  • First: If the excess is "purely beneficial," in this case, the contract is "valid" and produces its legal effects.

  • Second: If the excess is "purely harmful," in this case, the contract is "void" and has no legal effect.

  • Third: If the excess is "between benefit and harm," in this case, the contract is "voidable" and produces its legal effects unless the principal requests its annulment, in which case the contract is void and has no legal effect.

This article is considered one of the most important articles related to the limits of agency, as it protects the rights of the principal and provides an opportunity to annul the contract if the agent exceeds the limits of the agency.

Related To

Article 86

  1. The invalidation of a contract shall not be invoked against the particular successor of a contracting party if said successor acquires in good faith an in-kind right by way of exchange.

  2. A particular successor shall be deemed to have acted in good faith if, at the time of concluding the contract, he had no knowledge of the reason for nullification of the contract of his predecessor and he would not have been able to attain such knowledge even if he exercised the level of care a reasonable person would exercise under similar circumstances.