Turkey: Agency Without Authority

Last Updated: 18 January 2013
Article by Pelin Baydar

Agency without authority is regulated under section 10 of the Turkish Code of Obligations No. 6098 ("TCO") between Articles 526-531, entitled "the rights and obligations of the agent" and"the rights and obligations of the principal".

In General

The aspects of agency without authority are as follows:

1) The Conduct of business: Agency without authority is defined as the conducting of a business. It is not mandatory that the conduct of the business be a legal transaction.

2)The Business of another person: The agent is legally conducting the business of another person (the principal).

3)Lack of authority: The agent does not have the authority to enter into commitments.

4)The will to conduct business: It is not obligatory that the agent bears the will to conduct business in the principal's interest or that the agent's activities are carried out with the knowledge of the person owning the business. It is sufficient that the agent has in general the will to conduct business; in other words the agent's will is aimed at the conduct of business.

The Rights and Obligations of the Agent

Conduct of business

According to Article 526 of the TCO, the person who conducts the business of another without authorization is obliged to do so in accordance with the other's best interests and presumed intentions in mind.

The liability of the agent who conducts business without authority

The liability of the agent who conducts business without authority is regulated under Article 527 of the TCO. Under this article, the agent is liable for negligence. The cases where the liability of the agent is judged more leniently are also explained under Article 527.

Accordingly, if the agent acted in order to avert damage or imminent damage to the principal, his liability is judged more leniently. The TCO speaks of "imminent damage to the principal" besides "present damage to the principal", while in the previous Code of Obligations, it was stipulated that if the agent acted in order to avert present damage to the principal, the agent's liability is judged more leniently.

Under the same article, it is regulated that where an agent's activities are carried out against the express or otherwise recognizable will of the principal, and the prohibition was neither immoral nor illegal, the agent is also liable for chance occurrences. If the agent proves that the damages would have occurred due to chance occurrences without his involvement, he may be released from liability.

Lack of capacity of the agent who conducts business without authority

Article 528 of the TCO regulates that where the agent lacks capacity to enter into contractual commitments, he is liable for his agency activity only to the extent that he is enriched as a result of such commitment or he is liable for his agency activity in the amount which he alienated in bad faith. However, liability in tort is reserved.

The Rights and Obligations of the Principal

Agency in the principal's best interest

Article 529 regulates the principal's rights and obligations where the agent carries out activities in the interest of the principal.

The obligations of the principal within the framework of the article:

1)Principal is obliged to reimburse the agent for all expenses that were necessary or useful and appropriate in conducting their activity, plus interest. 

2)Principal shall release the agent from liability for all obligations assumed.

3)Principal shall compensate the agent for any damage incurred as a result of carrying out their activity.

Article 529 of TCO shall apply to the agent if the agent acted with all due care while carrying out their activity, even if the intended outcome was not achieved.

Where the agent's expenses are not reimbursed, he has the right of claim in accordance with the provisions governing unjust enrichment.

Business conducted in the agent's interest

Article 530 regulates the principal's rights and obligations where the agent carried out activities for his own interest.

Where an agent's activities were not carried out with the best interests of the principal in mind, the principle is nonetheless entitled to appropriate the resulting benefits; however the principal is obliged to compensate the agent and release him from obligations assumed to the extent the principal is enriched.

Approval of agency activities

Where the agent's actions are approved by the principal after the agent acted without the authority of the principal, the provisions governing agency become applicable pursuant to Article 531.

Conclusion

Articles 526-531 regulate agency without authority; or situations where an agent willfully conducts business and enters into commitments on behalf of another person (the principal) without their authority. The agent and the principal shall have rights and obligations as a result of the conducting of agency without authority.

The agent is obliged to carry out activities in the best interest of the principal and the principal's assumed will, and the agent is liable for negligence. If the agent acted in order to avert damage or imminent damage to the principal, his liability is judged more leniently; whereas, if the agent's activities are prohibited expressly or otherwise recognizably by the principle, then the agent's liability is increased.

Where the agent conducts activity in the interest of the principal, the principal is obliged: i) to reimburse the agent for all expenses that were necessary or useful and appropriate in conducting his activity, plus interest; ii) release the agent from all obligations assumed; and iii) compensate the agent for any damage incurred as a result of the conduct of his activity. Where the business is conducted in the agent's own interest, the principal is entitled to appropriate any resulting benefit, and the principal is obliged to compensate the agent and release him from obligations assumed to the extent the principal is enriched. On the other hand, if the principal approves the agent's actions, the provisions governing agency in Article 531 of the TCO become applicable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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