ISRAEL AGENCY LAW
1. (a) Agency is the grant
of power to an agent to do, in the name or in place of a principal, a legal act
in respect of a third party.
(b) Any legal
act may be an object of agency, except an act which by its nature or under law
must be performed personally.
A person`s agent has the same status as that person himself, and an act of the
agent, including his knowledge and intent, binds or entitles, as the case may
be, the principal.
3. (a) Agency is conferred
by written or oral authorisation of the agent by the principal, or by notice to
the third party by the principal, or by the conduct of the principal towards one
(b) Where a
person is called upon to accept the act of an agent, he may refuse to recognise
the agency so long as a written authorisation has not been produced and a copy
thereof delivered to him.
Every person is competent to perform as an agent any act which he has sufficient
understanding to perform, but his rights and obligations shall be governed by
the general rules of legal capacity.
5. (a) Agency extends
-unless limited by the authorisation -to any act reasonably required for the
proper carrying out of its object, but it does not -except by express
authorisation -extend to proceedings before any court, tribunal or arbitrator,
nor to a compromise, renunciation or gratuitous act.
(b) An agent may
do any urgent and unforeseen act reasonably required for safeguarding the
interests of the principal in connection with the object of the agency even if
such act exceeds the scope of the authorisation.
6. (a) Where a person has
acted as the agent of another person without being authorised to do so or in
excess of the authorisation, the other person may, subject to the provisions of
subsection (b), ratify the act ex post facto. Ex post facto ratification shall
have the effect of prior authorisation:
Provided that a right acquired by another person
in good faith and for value before ratification shall not be impaired.
(b) If at the
time of the act the third party did not know that the agent acted without
authorisation or in excess of his authorisation, he may, at his option, so long
as the ratification of the act has not come to his knowledge, regard the agent
as a pany to the act or withdraw from the act and claim damages from the agent.
(c) A body
corporate may ratify an act done on its behalf prior to its establishment, and
the provisions of this section shall apply in such a case.
If at the time of the act the third party did not know of the existence of the
agency or did not know the identity of the principal, the act of the agent shall
bind the principal and the agent jointly and severally, but shall entitle the
agent only. However, the principal may assume any right of the agent in respect
of the third party save insofar as such is inconsistent with the right by reason
of the nature or conditions thereof or by reason of the circumstances.
When a person has taken upon himself to be an agent, he shall be loyal to the
principal and shall act in accordance with his instructions and, save insofar as
the contrary intention appears from the or terms of the agency, shall -
(1) disclose to
the principal any information, and deliver to him any document, relating to the
object of the agency, and render accounts to him on his activities;
(2) not, in
respect of the same object, be the agent of different principals without their
(3) not, while
acting as an agent, deal with himself;
(4) not without
the consent of the principal receive from any person any benefit, or any promise
of a benefit, in connection with the object of the agency;
(5) not use to the
detriment of the principal any or document which comes into his possession in
consequence of the agency, and generally refrain from doing anything involving a
conflict between the interests of the principal and his own interest or the
interests of another person.
9. (a) If the agent
infringes any of the obligations imposed on him by Section 8 the principal shall
be entitled to the remedies provided for breach of contract.
(b) Where the
agent does any act in respect of a third party by way of infringement of an
obligation as aforesaid, and the third party is privy to the infringement, the
principal shall, in addition to the remedies referred to in subsection (a), be
entitled to repudiate the act and to claim also from the third party the
compensation due to him from the agent.
(a) Any property which comes into the possession of the agent in
consequence of the agency is held by him as the trustee of the principal. This
applies even if the agent has not disclosed the existence of the agency or the
identity of the principal to the third party.
The principal is entitled to any profit or benefit accruing to the agent in
connection with the object of the agency.
The principal shall indemnify the agent for any reasonable expenditure incurred
and any liability reasonably assumed in consequence of the agency.
Notwithstanding the provision of Section 10(a), the agent shall have a lien on
the property of the principal which came into his possession in consequence of
the agency -including property held by him as the trustee of the principal -to
an extent sufficient for the payment of his remuneration and other amounts due
to him from the principal in consequence of the agency.
Debts owed by the agent to the principal, and debts owed by the principal to the
agent, in consequence of the agency, may be set off against each other.
14. (a) The agency terminates
upon the cancellation thereof by the principal or the agent or upon the death,
loss of capacity, bankruptcy or, in the case of a body corporate, winding-up of
one of them.
provisions of this section shall not apply if the authorisation was given for
the purpose of safeguarding a right of another person or of the agent himself
and such right depends on the carrying out of the object of the agency.
15. (a) So long as the agent
does not know of the termination of the agency, he may, in respect of the
principal, regard it as continuing.
(b) If the third
party does not know of the termination of the agency, he may regard it as
continuing; and if the agent knows of its termination, the third party shall,
moreover, have the option given him by Section 6(b).
An agent shall not appoint an agent for the object of his agency unless he has
been expressly or implicitly authorised to do so or he does so for the purpose
of an act as referred to in Section
17. (a) Where one
authorisation is given to several agents, it shall he presumed that they are to
(b) Where one
authorisation is given by several principals, it shall presumed that the agent
is to act by the joint authority of all of them.
For the purposes of this Law, a person shall be deemed to have knowledge of a
thing if he should as a reasonable have knowledge thereof or if he has received
notice thereof in the ordinary way.
This Law shall not derogate from the provisions of any law regulating a
particular category of agency relationships.
20. The Eleventh Book of the Mejelle
is hereby repealed.
This Law shall come into force three months from the date of its publication in
Reshumot. Relations between a principal and an agent which were created before
the coming into force of this Law shall continue to be governed by the earlier