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The agency according to the Bulgarian commercial law

The legal form of the commercial agent is regulated in Article 26 of the Commercial Code. The agency is a form of commercial representation too, though the extent of the mandate is more limited in comparison to the procuration. The agent is a legally competent, natural person or legal entity that is authorized by the merchant to perform the acts set forth in the mandate for compensation. Contrary to the procuration, the content of the authorisation is not defined by the law but by the mandate. In this context, there are, depending on the implied authorisations, three types of agencies to be distinguished:

  • General action authority – the agent is entitled to effect all commercial transactions related to the normal business operations of the merchant’s enterprise.
  • Special action authority – is given for the conclusion of specific types of commercial transactions.
  • Explicit action authority – according to Article 26 (2) of the Commercial Code, the agent is not authorized to alienate or encumber real estate property, to accept bills of exchange, to obtain a loan or to engage in litigation. Regarding these actions, there must be an explicit action authority.
  • Action authority by kind – is given regarding a concrete commercial transaction outside the normal business operations of the merchant’s enterprise.

The agency must not be recorded into the commercial register and therefore, it becomes legally effective towards third parties only if they knew or must have known about the agency. Furthermore, the agent must sign in a way that displays that he is not acting in his name but in the name of the enterprise.

According to Article 29 of the Commercial Code, the prescription regarding the prohibition of performing competitive activities without the merchant’s consent applies to the agent.

An agent may not transfer its powers to a third party without the merchant's consent.

Legal transactions that have been performed by the agent outside of the authorisation are effective upon the merchant unless he denies them directly after learning for them.

The agency terminates according to Article 28 of the Commercial Code in accordance with the provisions of Bulgarian civil law. Conditions such as the decease or the incapacitation of one of the parties, insolvency of the legal entity, and withdrawal of the authorisation (mandate) etc.