COMMISSION ON BEHALF OF ANOTHER IN COMMERCIAL TRANSACTIONS IN BOLIVIA

The figure of commission on behalf of another is a commonly used tool in commercial practice, especially for representing economic interests without transferring ownership. In practice, this mechanism allows a person (the commission agent) to perform legal acts in their own name, while acting for the benefit of a third party who grants them the commission.

WHAT DOES A COMMISSION ON BEHALF OF ANOTHER INVOLVE?

When a commission is granted on behalf of another, the commission agent acts under the instructions of an interested third party, but does so in their own name. This means that, for third parties, the commission agent appears as the contracting party, even though the benefits or burdens of the transaction are borne exclusively by the principal.

For example, a company based in La Paz that imports agricultural machinery may instruct a commission agent to purchase equipment abroad. The commission agent signs the purchase contract with the foreign supplier in their own name, even though they are acting under the specific instructions of the Bolivian company. To the supplier, the commission agent is the buyer, but in reality, the one assuming the costs and receiving the machinery is the principal company.

In this type of relationship, there is no direct legal link between the third party contracting with the commission agent and the principal. Legal effects are created solely between the commission agent and the third party on one hand, and between the commission agent and the principal on the other.

LEGAL EFFECTS OF COMMISSION ON BEHALF OF ANOTHER

One of the most important aspects of this legal figure is the delimitation of liability. Although the commission agent enters into legal acts with third parties, it is the principal who assumes the economic consequences. However, in the event of a breach of obligations towards the third party, the commission agent is directly liable, since they appear as the visible contractual party.

For instance, if a commission agent purchases goods for their principal but fails to pay the supplier, the supplier cannot claim payment from the principal, as no contractual relationship exists between them. This preserves the principal’s confidentiality and simplifies certain commercial operations.

USES OF COMMISSION ON BEHALF OF ANOTHER

In the Plurinational State of Bolivia, commission on behalf of another is widely used in sectors such as importation, goods trading, and commercial representation. Bolivian companies seeking to acquire foreign products often hire specialized commission agents who execute transactions and manage logistics, acting in their own name but for the benefit of the company.

This model is also useful when the principal wishes to remain anonymous or avoid tax and operational complexities in negotiations with multiple suppliers.

AGREEMENT BETWEEN COMMISSION AGENT AND PRINCIPAL

The relationship between the commission agent and the principal is governed by a specific contract detailing the terms of the commission, the agent’s remuneration, limits of authority, and reporting obligations. This relationship is based on trust and adherence to the instructions provided.

The commission agent must act with diligence and loyalty, and is required to transfer all benefits obtained during the commission to the principal, unless agreed otherwise. They must also provide a clear account of all actions taken.

CONCLUSION

Commission on behalf of another is a legal mechanism that enables strategic and effective operations conducted in one’s own name for the benefit of a third party. Its proper application facilitates commercial activity in key sectors of the local economy and offers legal flexibility without compromising contractual security.

Our law firm offers specialized legal advice on commission contracts on behalf of another, including drafting, review, and conflict resolution. If you require legal support in this area, please do not hesitate to contact us or reach out to our team.

Frequently Asked Questions (FAQs)

Can the commission agent be sued by the third party they contract with?

Yes. Since the commission agent acts in their own name, they are directly liable to the third party for the acts performed.

Can the commission agent’s authority be limited?

Yes. The commission contract may include clear limitations on what the agent may or may not do.

Can the principal interact directly with the third party?

No. Generally, there is no contractual relationship between the principal and the third party, so the principal has no standing to act directly.

What happens if the commission agent acts beyond their mandate?

The agent may be held liable to the principal for exceeding their instructions, even if the act was valid with respect to the third party.

The content of this article does not reflect the technical opinion of Rigoberto Paredes & Associates and should not be considered a substitute for legal advice. The information presented herein corresponds to the date of publication and may be outdated at the time of reading. Rigoberto Paredes & Associates assumes no responsibility for keeping the information in this article up to date, as legal regulations may change over time.