How Does Power Of Attorney Or Agency Work According To Ethiopian Law?
Did you appoint someone as your agent or given power of attorney in Ethiopia? Do you
want to know how the power of attorney or Agency works according to Ethiopian law?
Below you will find a brief note on the topic.
Agency is a relationship in which one gets the authority to act on behalf of another. There
are two sources of agency. Agency created by law (Ex. minor-tutor relationship) and agency
created by contract (here the relationship is created by the consent of the principal and the
agent. It is defined in the Ethiopian civil code as a contract whereby a person the agent,
agrees with another person, the principal to represent him and to perform on his behalf one
or several legally binding acts.
Form of Agency
Normally the parties are free to determine the form of their agency. However where the act
to be performed is required by law to be made in writing the agency as well must be made in
The Principle of Agency
The principle of agency states that a person who acts through another acts himself.
According to his principle it is the principal and not the agent that is a party to the act
carried out by the agent.
However this principle holds true for cases of complete agency. Complete agency is an
agency which the agent acted in the name of the principal and the agent acted within the
power given to him. But if the agent acted out of the power given to him, this does affect
the rights and obligations of the principal. But there are two exceptions where such acts bind
the principal. These are where the principal voluntarily ratifies the act or the contract and
where the law compels the principal to ratify the contract on the ground of good faith
Scope of Agency
Normally it is up to the agent and the principal to decide the scope of authority of the agent.
However, the law provides two types of agency. i.e. General agency and special agency.
1. General Agency is an agency where the acts to be carried out by the agent are not
enumerated in such cases the agent is considered to have the power of carrying out
acts of management such as collection and discharge of debt and sale of perishable
2. Special agency is an agency where the authority of the agent must be clearly and
Duties of the agent
The agency contract may constrain some other obligations of the agent to his principal but
the following duties are compulsory in any agency ration ship.
1. Utmost good faith:-one of the most important duties of an agent is that of utmost
loyalty or trust worthiness i.e.
(A) A duty to avoid conflict of interest and the duty of disclosure.
(B) Not to make any secret profit or take a bribe.
(C) Not to misuse confidential information.
2. Diligence: - in performing his job an agent should exert the degree of care and skill a
reasonably prudent person would use in a similar situation.
3. Duty to account: - the agent must account to the principal or all money and property
of the principal that come into the agent?s possession. This is to make the principal
informed and make decisions accordingly.
4. Duty To Account For Management Of Affairs
5. Personal performance: - unless the agent is expressly or impliedly authorized to
delegate the work to another person, he must accomplish his duty personally.
6. Duty to appoint substitute: - If unforeseen circumstance prevent the agent from
performing his act to the principal personally and he can not tell the principal and set
instruction as to what he should do he is obliged by law to appoint another person to
perform the agency. This is to keep the interest of the principal
Duties of the Principal
1. Remuneration: - It is the compensation that is or should be due to the agent for the
services he renders to the principal. So, the principal must pay to the agent the amount
specified in their agreement.
2. Advancement of Money and Reimbursement: - The agent needs money to carry out
his obligation under the agency. The principal must give this money in advance. But if
the agent performs his duty on his own money the principal must reimburse (repay) him.
3. Indemnity: - The agent while performing his duties under agent may encounter damage.
For this damage, the law provides an indemnity from the principal so, an agent entitled
to compensation from the principal fro any losses sustained in performing any
According to the Ethiopian civil code an agent liable for the principal where he violates his
contractual and legal duties. The agent acted without having authority or beyond the
authority given to him and the principal does not ratify the act or the law does not compel
the principal to accept and causes damage to third party, he is liable to that third party.
Termination of Agency
1. Revocation by the principal
This is the power of the principal to terminate the agency at his own wish. Irrespective
of any express words in the contract, the principal can revoke the agent?s authority so
that any further act by the agent does not bind the principal.
2. Renunciation by the agent
This is the right of termination of agency by the agent. The agent has the right to
terminate the agency by giving notice in advance.
3. Death, Mental Incapacity or Bankruptcy of either party is also factor that may serve
or the reason of termination of agency.
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