Guatemala: Kinds of liability of an entity’s attorneys-in-fact

Written 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 matters, depending on the structure of their government. In view of the foregoing, the figure of the power of attorney entails several responsibilities derived from the exercise of the same.

 

The mandate constitutes, according to our legislation, a contract, whether unilateral or bilateral, which obliges the acceptance and fulfillment of what has been 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, agent or attorney-in-fact, who accepts it expressly or tacitly, 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 his powers, but is not liable to third parties for the principal’s non-compliance. [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 to it, and the attorney-in-fact must respond for the obligations contracted.

 

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 business in common has been carried out, as established in Article 1716 of the Civil Code: If two or more persons have appointed an agent for a business in common, they are jointly and severally liable for all the effects of the mandate.

 

Based on the foregoing, it is clear that the attorneys-in-fact of an entity are obliged to account for their administration and report on their actions, exercise the mandate with due diligence, protect the interests of the principal, and not 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 answer 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. 

 

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

 

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