Types of liability of an entity’s attorneys-in-fact in Guatemala

By: Lourdes Vega

In Guatemala, in the case of commercial, civil entities or associations, as a rule and in accordance with the law, they have their legal representatives. In addition, depending on their line of business, they may appoint attorneys-in-fact for one or several matters, or for all their affairs, depending on the structure of their government. In view of the foregoing, the figure of the mandate or power of attorney entails several responsibilities derived from the exercise thereof.

The mandate constitutes, according to our legislation, a contract, whether unilateral or bilateral, which obligates the acceptance and compliance of the entrusted by the principal or principal. The mandate is, according to Rubén Alberto Contreras: “… express and solemn agreement of wills by means of which one of the parties, called the principal or principal, entrusts the other party, the agent or attorney-in-fact, who expressly or tacitly accepts it, to carry out one or more legal acts or business on his behalf and for his account (mandate with representation) or in his own name but on behalf of the principal (mandate without representation)” [1].

The attorney-in-fact or agent, according to Guatemalan law, is obliged to diligently perform the mandate or power of attorney, and to respond for damages caused by omissions in its exercise[2]. This applies both to the attorney-in-fact appointed by a particular person, or in the case in which an entity grants a power of attorney or mandate to a certain person. Accountability must occur during and after the exercise of the powers granted. It will also be liable for the misuse of its powers, when it has exceeded its powers, and in crimes in which it has participated directly. Some responsibilities can be detailed as follows:

Criminal Liability: The attorneys-in-fact have criminal liability in cases where they have personally participated directly in the criminal act attributed to the principal, being liable for the criminal act or fact committed and their participation in it. [3]

For example, if the principal company is involved in any unlawful act, whatever it may be, the attorney-in-fact shall be liable before the law in the proportion in which he/she has participated in the execution of the crime.

Civil Liability: The attorney-in-fact has the obligation to account for the exercise of the power of attorney, but is not liable to third parties for the non-compliance of the principal. [4] In this case, the principal is liable to the attorney-in-fact for the damages suffered by the latter, both for those arising from the breach of the obligations assumed in the exercise of his powers, as well as for the consequences thereof, except in cases where the attorney-in-fact has exceeded his powers.

For example, if the attorney-in-fact, in the exercise of his powers, signs a contract with a third party, the principal must comply with the commitments acquired by such contract. However, if the contract signed is excluded from the powers granted to the attorney-in-fact, the principal is not bound by it, and the attorney-in-fact is liable for the obligations assumed.

Labor Liability: In labor matters, the principal shall be directly liable for the actions performed by the attorney-in-fact. Labor liability operates as indicated in Article 4 of the Labor Code. [5] For example, if one of the attorneys-in-fact of the entity were to dismiss an employee, the employer (the entity) is responsible for the payment of benefits according to the law for the dismissal.

Regarding joint and several liability, the attorney-in-fact does not have joint and several liability with the principal, unless a common business has been carried out, as established in Article 1716 of the Civil Code: If two or more persons have appointed an agent for a common business, they are jointly and severally liable for all the effects of the mandate.

Derived from the foregoing, it is clear that the attorneys-in-fact of an entity have the obligation to account for their administration and report on their actions, to exercise the mandate with due diligence, to protect the interests of the principal, and not to exceed the powers and limits established in the mandate. Before third parties, according to the interpretation that has been given in Guatemala to the applicable legislation, the principal is responsible for claims of third parties for the acts carried out by his attorney-in-fact and must respond before the latter, for the damages and prejudices suffered, both of those derived from the breach, as well as of its consequences, The attorney-in-fact does not assume any personal obligation and cannot be called to respond for facts derived from the exercise of the power of attorney, except in the cases in which he has exceeded his faculties, or in the crimes in which he has participated directly for their execution.

“Everyone must intervene and act for himself in juridical life, since the juridical consequences of the act directly affect the one who executes it.”[6]

[1] Rubén Alberto Contreras. Obligations and Legal Business (Special Part: Contracts), page 49.

[2] ARTICLE 170 of the Civil Code: The agent is obliged by the acceptance to diligently perform the mandate and to answer for the damages that, if not executed, may be caused to the principal.

[3] ARTICLE 38 of the Criminal Code: With respect to legal persons, directors, managers, executives, representatives, administrators, officers or employees of legal persons who have intervened in the act and without whose participation it would not have been carried out shall be held responsible for the respective offenses and shall be punished with the same penalties indicated in this Code for individuals.

[4] ARTICLE 1712 of the Civil Code: The principal must fulfill all the obligations that the mandatary has contracted within the limits of the mandate. In what the mandatary has exceeded, the principal is not bound except when he expressly or tacitly ratifies it.

[5] ARTICLE 4 of the Labor Code. Employer’s Representative: Employer’s representatives are the individual persons who perform management or administrative functions on behalf of the employer, such as managers, directors, administrators, recruiters and all those who are legally authorized by the employer. The employer’s representatives, in their relations with the workers, directly bind the employer. (….).

[6] Ortolan. History of Roman Legislation. quoted by Gonzalo Figueroa Yañez. The Patrimony. Page 167.