For implementation of their civil rights and duties, natural persons and legal entities quite often resort to services of those whose actions create, change or terminate certain commercial legal relationships. The law of agency is based on the Latin maxim “Qui facit per alium, facit per se,” which means “he who acts through another is deemed in law to do it himself.” [1] It is a dynamic and competitive branch of law which comprises of norms regulating the legal relationship between principal, agent and third-party establishing rules of conduct and liability for them in case of breach. It also exists as a fact of manifestation of consent by principal to agent that he should act on his behalf and be subject to his control and consent.
The concept of agency is quite new to Azerbaijan commercial law practice and main source for the regulation of this legal concept is sixteenth section of Civil Code “Representation in deals”. As the law of agency is a modern legal concept, the topic theoretically has not been comprehensively researched by the legal actors and theoretical basis for this topic including books, articles and other database still have not been shaped. This situation exists not only in our country, but in most parts of the world. As Paula J. Dalley states “If we take a look at the theory of law of agency, it is in a sad state. It is almost non-theorized and cared by legal scholars. Its basic tenets, its modus operandi, and its theoretical foundations are a mystery to lawyers, judges, and legal scholars.”[2]
Dual agency means that one agent represents both parties in the agency relationship and acts for the benefit of both of them. According to the legal practice of several countries, with the consent of both parties, agent may represent both of them and receive compensation from both. In the law of agency, dual agency is considered as a risky practice. This concept is not practical and applied widespread as it can lead to some adverse consequences.
Dual agency can be in two forms which are disclosed and undisclosed.
- Disclosed dual agency
It is legal in the commercial law for an agent to act and represent interests of both persons if they are duly informed about this.
In the supplementary Chapter for Oklahoma Real Estate principles it is stated that the principal wants the broker to negotiate for the highest possible price, third party wants the agent to act for the lowest price and in attempting to serve both masters, brokers may be sacrificing the interest of one to that of the other or that of both to their own interest.[3]
- Undisclosed dual agency
It is not ethical and legal for an agent to represent both principal and third person without their knowledge and consent. This action is illegal and cause liability for agent. An undisclosed dual agent can be liable for damages and forfeiture of compensation as well as loss of a real estate license.[4]
Dual agency institute is mentioned in the Civil Code of Azerbaijan Republic only in the context of commercial representation. In accordance with article 361.2, simultaneous commercial representation of different parties in agreement shall be permitted upon consent of these parties or in other circumstances specified in this Code.[5] The essence of the article is that if dual agency is disclosed to the parties, and they have the consent, in this case it is legal. But if the parties are not duly informed about this issue, then it is not legal under the law.
[1] https://www.law.cornell.edu/wex/agency
[2] Paula J. Dalley. Theory of agency law.University of Pittsburgh Law review-2011. Vol.72. P-497
[3] Dale Baze. A supplemental Chapter for Oklahoma Real Estate principles. Common law of agency. Charles Barnes School of Real Estate.2009. p-10
[4] Ibid, p -11
[5] Civil Code of Azerbaijan Republic, article 361.2
Bu bloqda yerləşdirilən məqalələr hüquqi məsləhət xarakteri daşımır və belə olaraq nəzərə alınmamalıdır. Əlaqədar məsələ üzrə hüquqi dəyərləndirmənin və məsləhətin əldə olunması üçün müvafiq hüquqi məsləhət xidmətləri göstərən şəxsə müraciət etməyiniz tövsiyə olunur.