Representation can be divided into two types depending on the basis of representation:

• Representation arising from law – requires no specification, because the representative has the respective right/obligation pursuant to law. Legal representation occurs, above all, within families. For example, a parent is the legal representative of a child under 18. The representative of a legal entity, pursuant to law, is its management board.
• Contractual representation – valid only when there is a relevant agreement between the representative and the principal, e.g. the relationship between a lawyer and a client.

With an agency relationship, it is important to bear in mind that even though it is the representative who acts, they do not create rights or obligations for themselves, but for the person whom they represent.

The first and foremost requirement for representation is that the transaction can actually be performed through a representative at all. Transactions that need to be performed in person, according to the law or an agreement, must not be done through a representative. The persons may agree between themselves which transactions will be performed in person. Personal transactions required by the law may be, for example, getting married or making a will. This comes from the extremely personal nature of these transactions. If the personal character of the transaction is not based on the law or an agreement, it may be based on the nature of the transaction.

The right of representation is created by agreement in two cases, depending on the addressees:

• By authorising a particular person – the principal knows the representative and provides a declaration of intent to a specific person. The principal may make a relevant declaration of intent to the representative (internal authorisation) as well as to the third party with whom the representative must conclude a transaction (external authorisation).
• By providing a declaration of intent to the public – the declaration of intent is provided to an unspecified group of people; the use of this solution is rather rare in practice.

If the statements or behaviour of the person acting as the representative cause another person to reasonably believe that the person acting as the representative has been granted an authorisation to conclude the transaction and the principal knows or should know that the person is acting on their behalf as a representative and allows that person to carry out such activities, the principal is deemed to have granted the authorisation.

If the transaction is concluded by an employee of the person operating in the economic or professional activity or by another person for whom the person operating in the economic or professional activity is responsible and the transaction is related to such economic or professional activity, it is presumed that the transaction is concluded on behalf of the person operating in the economic or professional activity.

Authorisation can be granted with a power of attorney. A power of attorney is a written document granting authorisation to act. It authenticates these powers following the principle of openness. A power of attorney proves that the representative has the right of representation, and third parties can rely on it.

The law does not specify the form of an authorisation; instead, the general principle applies that the authorisation must be given in the same form as the transaction for the performance of which someone is authorised. For example, all transactions with immovable property must be notarised, meaning that an authorisation for concluding such an agreement must also be notarised.

A power of attorney will generally determine the extent of authorisation. It is important to note that the limits of authorisation are set by the principal. If the rights given to the representative are not clearly defined in the power of attorney, this may cause a lot of confusion and the representative might misunderstand the limits of their authorisation and overstep them; third parties might misinterpret the limits of authorisation as well. If the extent of the power of attorney is ambiguous, it is above all the understanding of the representative that is taken into account, or otherwise that of the persons relying on the declaration of intent to the public or on the statements or conduct of the principal. The extent of authorisation may be specified by law.

A transaction concluded without the right of representation is a transaction concluded by a person who does not have any representation rights or has concluded the transaction by exceeding the limits of their powers. There is a distinction between unilateral transactions (e.g. public promise to pay is a unilateral transaction not aimed at a certain person, while cancellation of a contract is a unilateral transaction aimed at a certain person) and multilateral transactions (e.g. entering into contracts).

A unilateral transaction not aimed at a certain person entered into on behalf of another person without the right of representation is null and void. A special rule applies to unilateral transactions aimed at a certain person. A multilateral transaction entered into on behalf of another person without the right of representation is void unless the person on whose behalf the transaction was entered into by the person without the right of representation subsequently ratifies the transaction. The law provides for more detailed rules about the ratification of a transaction. There are also rules on the liability of a person who acts without the right of representation.

A right of representation is terminated when:

• the representative entered into the transaction for which the authorisation was given;
• the entry into the tranaction for which the authorisation was given has become impossible;
• the term of the authorisation expires;
• circumstances arise that involve the termination of the authorisation;
• the principal withdraws the authorisation;
• the representative waives the authorisation;
• this follows from the transaction that serves as the basis for the authorisation;
• the contract on which the authorisation is based expires;
• the principal dies;
• the legal entity that is either the principal or the agent is liquidated;
• the principal is declared bankrupt;
• another basis for terminating authorisation occurs, as provided for by law.

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