The difference between commission agency and contract agency

The Kuwaiti legislator defined contract agency in the text of Article 271 of the Trade Law as a contract under which a person is obligated to undertake, on a continuous basis, in a specific area of activity, to induce and negotiate the conclusion of deals for the benefit of the principal in return for a fee, and his task may include concluding these deals in the name and account of the principal.

Whereas, the definition of commission agency in Article 287 of the same law is that it is a contract under which the agent is obligated to perform in his name a legal act for the account of the principal in return for a fee, and this fee is not subject to the judge’s estimation.

The difference between commission agency and contract agency

The commission agency is distinguished from the contract agency in that the commission agent contracts in his name and appears before the contracting party as the employer who works for himself, and then he is a party to the contract that he concludes and is responsible to the contracting party for the implementation of that contract and the holder of the capacity in litigation regarding the rights and obligations arising from it in general And the debtor or creditor becomes in the contract that he concludes with third parties.

Whereas the commercial contract agency is a kind of ordinary agency based on the idea of representation, where the agent is just a representative of the principal in concluding the deal, and when it is concluded within the agency’s limits, the relationship has all its effects directly between the principal and the third party that was contracted with, so each of them has the right Recourse to the other if he breaches his obligation. As for the agent, he does not have any legal relationship with the third party and does not entail any rights and obligations due to the conclusion of the transaction, and he is not considered a guarantor unless he commits himself to that.

The difference between commission agency and contract agency in the rulings of the Kuwaiti Court of Cassation

The rationale for the ruling of the Kuwaiti Court of Cassation No. 859 of 2000 dated 24/5/2003, the Commercial Department, clarified the difference between a commission agency and a contract agency, as it stated:

The merits of the ruling

The initial judgment supporting and complementing the contested judgment had established its judiciary by rejecting the payment expressed by the appellant (the bank) by not accepting the case for filing it against a non-qualified person and by obliging him to pay to the first respondent (the customer) the amount decided upon on the grounds that the bank when it sold the traveller’s checks in question to The first respondent was a commission agent for a company “….” – The second respondent – the issuer of the checks, and that the name of this company did not appear in the contract. Therefore, the appellant is obligated directly before his client – the first respondent – to compensate him for the lost checks.

And this what the ruling concluded and based on his judgment is not justified and does not lead to the result he ended up with and contradicts what is established in the papers, because the sale was made on the forms of traveler’s checks issued by the “…” company that owns the checks and its name appeared clearly in the contract. It is also proven that the appealing bank when His sale of checks to a client who was an ordinary agent and not a commission agent, and this is evident on the sale form.

It is also established in the terms of the contract that the checks are owned by “…” and that it is obligated, in the event of its loss or loss, to compensate the buyer for that, provided that he abides by the conditions stated on the back of the traveler’s check, and he must direct the compensation claim to it on the form prepared for this purpose, which is what the challenger did against him The first was that he directed his claim for compensation to a company “…” on the form prepared by the company for this purpose.

In its letter dated 9/22/1999 addressed to the appealing bank, the company “…” acknowledged that the latter is its agent and that the checks are owned by it and its name appears on the checks signed by the bank on its behalf. The appellant has what the appealing bank has when selling the traveller’s checks subject of the case to the customer, just an ordinary agent, the effects of the contract go to its parties – the customer and the company “….”_ and the appealing bank is not an agent with commission that the effects of the contract go to.

Sentence pronounced

If the contested ruling violated this consideration and extracted from the papers – contrary to what was established in them – that the bank was a commission agent and refused the payment he made by not accepting the case to file it against him against a person of no standing and obligating him to pay the amount, then he has violated what is established in the papers and erred in the application of the law, which requires distinguishing it.

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