Representation according to the Bulgarian law of obligations
The Representation is a legal institution referring to legal actions of one person (agent) on behalf of another (principal) whereby the principal has to bear the consequences resulting from the agent’s legal actions.
There are two forms of representation to be distinguished: voluntary representation – here, the representation is wanted and organized by the principal; and the second form is obligatory representation imposed by the law – in this case the law itself requires representation by certain persons. The general rules regarding the representation in Bulgaria can be found in the Bulgarian Obligations and Contracts Act.
Necessity and purpose of the representation
The necessity of performing legal actions in the name of another person may arise from different contexts. It may be caused by the inability to act, lack of time, physical impossibility, lack of competence and so on. The conclusion of a contract between an agent and a third party is recommended if the principal cannot or does not want to be on site or if the transaction is legally complicated and the principal prefers therefore an experienced reliable person to act instead of him. The representation is also necessary in cases where for specific reasons a person is not able to act or not (fully) legally competent. Excluding natural persons unable to act, the representation institute applies to legal entities as well – the persons that are appointed to represent the legal entity (company) act as agents of the legal entity. The obligatory representation regulates that minors have representatives appointed by the law – their parents.
Effect of the representation
The representation is a well-known legal institute with wide practical application. It has legal effect only if the following preconditions are satisfied:
1) declaration of intent to be represented
2) coming from the principal
3) within the power of his own representation power and
4) in cases where representation is permitted.
1) The agent must deliver an own declaration of intent. If instead of an own declaration of will someone else’s is delivered, the acting person is not an agent but an errand boy. To guarantee the declaration of intent delivered by the agent, he must be capable of acting.
2) The agent must deliver the declaration of intent in the name of the principal. He must make obvious that he is acting in someone else’s name. If the agent does not mention the name of the principal when he delivers the declaration of will or if the third party does not realize that the agent is acting in someone else’s name, the agent is treated as if he acted in his own name. The declaration of intent takes effect for and against the agent.
3) The agent must have powers of representation and act within these powers. If the principal authorizes the agent to act in his name, he determines the extent of the power of representation. For example, it may be determined by the character of legal actions that the agent may perform. If several persons have been authorised to exercise the same right to act, each of them may perform the act by himself unless something else is provided by the authorisation (Article 39 (2) law of obligations and contracts). The actual authority based on a legal transaction is called power of attorney. Regarding legal agency, the extent of the actual authority is provided by the law.
According to Article 42 of the law, a person that acts as an agent in absence of a granted actual authority has to pay damages to the other party that acted in good faith. The person under whose name the contract in absence of a granted actual representation powers has been concluded may also accept this contract.
4) In several cases, where strictly personal legal actions are required (marriages, wills etc.) agency is inadmissible as in these cases the legal actions are decided by the personal estimation of the person.
If the agent and the negotiating person make an agreement that derogates the principal, the contract will not be effective for the principal (Article 40 of the law of obligations and contracts).
In absence of the principal’s explicit consent, the agent may not conclude legal transactions with himself or third parties represented by the same agent in the principal’s name. The principal may revoke the power of attorney and the agent may reject it at any time. Neither principal nor agent may waive these rights (Article 38 of the law).
The agent is entitled to transfer rights to another person if it is within his authorisation or if the substitute power of attorney was required to safeguard the principal’s interest.
Formation of representation powers
The representation power is always formed as a consequence of a legally relevant fact. Mostly, it arises as a consequence of the following legally relevant facts:
1) declaration of intent made by a private person:
- from the principal’s unilateral declaration of intent (authorisation), e.g. his last will
- a contract.
2) Formation of representation power by an enactment:
- If the representation power arises from an administrative act, e.g. if the administrative act is appointed by a guardian that hereby obtains actual authority
- from a court decision
- from a child’s birth (parents obtain the actual authority for their child).
The represetntation is cancelled in the following cases:
- with the death of the agent or principal;
- with the dissolution of the legal entity;
- with the incapacitation of the agent or principal;
- with the withdrawal of the representation powers;
- with the adoption;
- regarding the guardianship over persons placed under disability: with the cancellation of the guardianship etc.
According to Article 41 of the law of obligations and contracts, the annulment of the power of attorney may not be hold out to third parties that negotiated in good faith, if the annulment requires a registration and if the registration has been made.