Duties of an Agent

1. As a general rule the agent must do what he has undertaken to do. If the agent defaults in his
duty to perform the work undertaken by him the principal will be entitled to recover
damages from the agent for the loss caused by him by such default.

Turpin vs Bilton 1843 Man & G 455

An agent was instructed to insure his principal’s vessel but failed to do so. In consequence when the
vessel was lost the owner was uninsured. Held that the agent was in breach of his contractual duty to
act and therefore liable in damages to the principal.

However, there are 2 important exceptions to this rule

a). A gratuitous agent (ie. A person who does not work for a commission) will not be liable for the
failure to perform,
b). An agent who has undertaken to do something which is unlawful will not be liable for the failure
to perform.

2. The agent is obliged to obey the lawful instructions of his principal in the perormance of his
work.

Dexwell vs Christie

In this case an auctioneer at a sale expressed to be “without reserve” was given secret instructions not
to sell below a minimum price. The goods were sold below that price and the owner sued for breach
of the agreement. Held that since the instructions were unlawful and a fraud on the members of the
public the auctioneer was not bound to follow them and was not liable in damages.

Where no instructions have been given and matters are left to his discretion the agent must act in
good faith and use his best judgment for the benefit of the principal.

Bertram Armstrong vs Godfrey 1830 1 Knapp 38

G was a broker and B gave him instructions to sell stock when the market price reached L 85 per unit
of stock. G did not sell when the price the price reached L 85, but held onto the stock and later was
compelled to sell it for less than L85 as the market fell. There was no agreement or usage in the
market, which permitted G to use his discretion and wait for the price to rise further. Held that G
must account to b for the price difference plus interest.

3. The general rule is that the agent must do the work personally and cannot delegate his work to a
sub agent or servant. This is based on the maxim “delegates non potest delegare”. The
exceptions to the rule are,

a). Where the principal is aware at the time of the creation of the agency relationship that the agent
intends to delegate his authority and the principal does not object to this.

b). Where the circumstances are such that it can be presumed that the agent was intended to have
power to delegate his authority.

c). Where the agent’s authority is such as to necessitate its execution with the assistance of other
persons.

d). Where the act delegated is purely ministerial and one which does not require or involve
confidence or discretion.

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Allan & Co. vs Europa Poster Services Ltd 1968 1AER 826

The defendants were outdoor advertising contractors and they persuaded the site owners to give
them authority to terminate any existing licenses ‘as soon as may be legally possible’. The
defendant’s solicitors sent such notices to the plaintiff and one of the issues was whether the maxim
‘delegatus non potest delegare’ had been violated. Held that what had been delegated was a purely
ministerial act and therefore the complaint of unauthorized delegation could not succeed.

e). Where such delegation becomes necessary because of a sudden emergency.

f). Where the delegation is a usual practice in the trade and there is nothing inconsistent in the
agreement.

The agent however, remains liable for the defaults of the sub agent. The sub agent generally will be
liable to the agent (not to the principal) who in turn will be accountable to the principal.

4. The agent must carry out his work with ordinary skill and deligence.- Both paid agents and
gratuitous agents are liable to the principal for the negligent performance of their duties.

Paid Agent – liable for failure to perform (nonfeasance) and for negligent performance (misfeasance)
Gratuitous agent – liable only for misfeasance.

5. Fiduciary duty – This means that the agent must conduct himself in a trustworthy manner in
the best interest of his principal. He must not allow his interest to conflict with those of the
principal. The specific duties which are owed are,

a). He must not personally buy or sell to his own principal without full disclosure.

McPherson vs Watt 18177 APP 254

Two ladies appointed an agent to sell their property. Desirous of acquiring it himself, but unwilling to
do so openly, he bought it in the name of his brother. When this was discovered, specific
performance of the contract was refused.

Seneviratne vs Seneviratne 33 NLR 204

Held that an agent appointed generally by a power of attorney cannot enter into a mortgage bond to
mortgage the property of the principal for the purpose of settling a debt that is owed by the principal
to the agent personally.

b). Owes a duty of full disclosure to the principal.

Keppel vs Wheeler 1927 Vol 1 KB 577

K employed W to sell a house. On 29 th May, W received an offer of L6150 from B and communicated
it to K who wrote accepting it “subject to contract”. On the 5 th June, D offered L6750 to W, who did
not communicate this to K and K sold the house to B on the 8 th June. Held that W had committed a
breach of duty towards K by not communicating D’s offer and was liable to pay K the difference
between the 2 offers.

c). Must not take advantage of his position or his principal’s property to gain benefits for himself.

De Vos vs Bett 16 NLR 373

The plaintiff was a broker employed by the defendant to purchase property. He falsely made out to
the defendant that the lowest price was Rs.120,000 when in fact, it was Rs. 112, 500. He agreed with
the seller to receive as commission the difference. Held that an agent who has arranged to make a
secret profit can recover nothing as commission not even the usual barker’s commission.

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Peter Pan Manufacturing Corporation vs Corsets Silhouette Ltd 1963 AER 402

The plaintiff’s an American Company designed and manufactured ladies garments. In 1950, they
developed a new type of brassiere which they patented and sold under various imaginative names.
The defendants obtained a license for the said product and manufactured and sold it in the UK. Some
8 years later a new improved brassiere was developed and toe plaintiff showed it to the defendant’s
designer in confidence. The defendants used this confidential information and manufactured similar
products. Held that since the information was confidential, the defendant’s could not use it and was
thus liable to account to the plaintiff for the profits made. Furthermore, it was held that eh agent’s
fiduciary duty could continue even after the termination of the agency.

d). Must not take any bribes – A bribe is the payment of a secret commission which is,

1. a payment made by the 3rd party to the patent, and

2. made with the knowledge that the agent is acting as an agent for a principal;
3. made without disclosure to the principal.

Boston Deep Sea Fishing Co vs Ansell 1888 39 Ch D 339

A director of company accepted payments from suppliers from whom he ordered goods. He also
took a commission from the contractor on a building contract. Held that he must account to the
company for the bonuses and secret commission he had received together with interest.

Where an agent makes a secret profit or takes a bribe =the principal has the following remedies.

1. to dismiss the agent without notice; and

2. to refuse the agent his remuneration or commission or to recover it if already paid
3. to recover the bribe from the agent if he has received it or from the 3rd party it f it is not paid
4. to sue the agent to the 3rd party for damages if any loss is caused to the principal as a result to
the 3rd part bribing the agent.

Salford Corporation vs Lever 1891 1 QB 168

Held that the agent and the person giving the bribe are jointly and severally liable to the principal for
any loss caused as a result.

5. to repudiate the contract with the 3rd party.

Shipway vs broadwood 1899 1QB 369

A agreed to buy horses from B provided A’s agent certified that they were sound. B offered to pay a
bribe to A’s agent if the horses were sold and this was accepted. The agent certified that the horses
were sound. Held that A was not bound by the contract whether the agent was in fact biased or not.

However, it should be noted the principal might not be able to recover the bribe as well as sue for
damages since that would amount to recovering the losses twice over. (Mahesan vs Malaysia
Government Officer’s Co-operative Housing Society Ltd 1979 Ac 374)

e). The agent has a general duty to account. – The specific obligations include

1. To keep personal property separate from the property of the principal;

2. To keep accurate accounts and produce hem if requested;
3. To hand over to the principal all documents originally handed to him for the purpose of the
agency relationship.

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 6. The agent must hand over to the principal all profits resulting directly or indirectly from the
agency. This includes any profit made by the agent unlawfully.

De Mattos vs Benjamin

In this case a turf commission agent was employed to make bets. Held that even thought wagering
was a void transaction he must pay over any winnings received by him as a result of such bets.

7. An agent is estopped from denying his principal’s title to money or goods on the ground that he
has superior title.