The legal liability of an unauthorized agent

The concept of agency, which has a wide area of application due to the rapidity of commercial transactions, enables contracts to be formed between the principal and the third party through the agent's very own declaration of intent. Within the scope of this thesis, the liability arising from the unauthorized agency has been examined. The first chapter aims to clarify the origins and the progress of unauthorized agency and how it differs from similar concepts. Subsequently, the requirements of an unauthorized agency have been defined. The agent shall transact on the behalf of the principal. This legal transaction shall be deemed unjustified due to nonexistence, invalidity or termination of the authorization or the bounds of the authority shall be exceeded by the agent. According to the regulations between TCO Art. 42-45, in cases where the third person is acting in good faith; unauthorized legal transaction may become binding for the principal. Also, the principal may ratify the legal transaction which leads to validation of the legal transaction that was formerly unauthorized. Lastly, the outcomes and the legal rationale of the liability of the unauthorized agent are examined. The liability of the unauthorized agent arises from the TCO Art. 47, which is a form of culpa in contrahendo liability. Here, the unauthorized agent is subjected to compensate the reliance interests of the third party, regardless of his culpability. Yet the court may decide on the compensation of the expectation interests if it's required by equity. Nonetheless, if the third party is not acting in good faith, the unauthorized agent shall not be held accountable for the aforementioned interests.