Direct representation according to Bulgarian commercial law

The first form of commercial representation is the proxy (procurator’s mandate), regulated in Article 21 of the Commercial Act. It is a legal form of representation provided for in the law. The Commercial Act defines the procurator as a natural person commissioned by the merchant to manage the company for remuneration. In this sense, the procurator is the merchant’s and the company’s representative in commerce. The procurator himself does not obtain commercial characteristics.

The legal relationship between procurator and merchant are established through an attorney-in-fact-contract and a contract for performance of business activities. Article 21 (1) of the Commercial Act provides that the procurator’s mandate requires the notarization of the signatures of the contracting parties and registration in the commercial register. The submission for registration in the commercial register shall be done by the merchant.

The proxy is a specific form of commercial agency because it grants ample representative powers to the procurator. The procurator’s authority includes the performance and the evocation of any acts or transactions related to the carrying out of the business activities of the merchant. This scope of representation is defined by law and may not be limited by the merchant. Towards third parties, only limitations regarding the representation of a specific branch are effective. Other arrangements between the merchant and the procurator are not effective in relation to third parties. Only in the internal relationship, the procurator may be liable towards the merchant if he breaches the limits laid down in the proxy by the merchant.

According to Article 22 (2) of the Commercial Act, the procurator may not alienate or encumber any real property of the merchant except when expressly authorised to do so. Self dealing transactions between the procurator and the commercial enterprise represented by him do not take part of the transactions prohibited by law - in legal practice this is assumed to be a big legislative mistake. 

Article 29 (1) of the Commercial Act implies the procurator’s restriction to exercise competitive activities. The procurator may not, without the merchant's consent, enter into commercial transactions either on his own behalf or on the behalf of a third party within the scope of their authorization. In case of breach of the obligations set forth the merchant shall be entitled to seek damages or to state that the transactions engaged in by the authorized persons have been made on his behalf. The statement shall be directed to the third party not later than one month after the merchant became aware of the transaction, but not later than one year after the transaction was made.

The proxy may be terminated upon withdrawal by the merchant and registration of this withdrawal in the commercial register. The proxy may not be terminated due to the merchant’s death or placing under disability.