Pursuant to Art. 2179 of the Ethiopian civil code, we find two sources of representation:  the agreement of the parties or by law. In most cases, the authority to represent a person on a transaction with a third person emanates from the agreement of the parties and seldom, when the social and economic realities so demand, such authority is conferred on a person by operation of the law. When the authority to act on behalf of another emanates from the agreement of the parties, the outcome will be that there will be two separate contracts.

Genesis, Development and Principles

The Roman low has been exerting a significant impact on the formation and development of modern private laws in many countries of the world, starting from the era of Justinia who was the Emperor of the Roman Empire around the 6th century A.D “Ethiopians at this time were in permanent communication with the Roman Empire of the East from which they derived their law (the Law existing legal system) based on the Roman law of Justinia.

Authority by Virtue of Contractual Agency

We have discussed what authority is under the above topics. This topic focuses on authority, which is derived from the agreement of the contracting parties, agent and principal. Hence in reading this topic we shall see it from the perspectives of the common law approach, the civil law and the Ethiopian approach in order to understand it well.

Obviously, an agent is a person who has the authority to act in the name and on behalf of another person called the principal. In other words, it is an authority given to the agent to perform juridical acts as a medium of an intermediary with another person called the third party. By juridical act, we mean acts having effects before the law. These acts performed within the scope of the authority granted, will bind the principal directly. That means the rights and obligations of the contract are that of the principal and the third party. The agent there is only to facilitate the formation of the contract and hence cannot be held liable for the non-performance by both the principal and the third party.