4.6 Duties and Rights of A Principal

ACTUAL

Authority is expressly given by the principal (orally or in writing), or implied from the express authority given, from the circumstances of the case, custom or usage of trade, and the conduct of parties. Authority that is not expressly given by the principal but which the law regards the agent as possessing although the principal has not consented to his exercising such authority.

APPARENT / OSTENSIBLE

4.6 DUTIES AND RIGHTS OF A PRINCIPAL

 There a several rights which would become the duties of the principal.

4.6.1 To pay commission or remuneration as agreed in the contract

 The principal is only obliged to pay the agent if the agent complied with the terms of the agency agreement and when the agent has earned the payment.  If agent is guilty or misconduct, Sec. 173 CA → agent losses his right to remuneration.

4.6.2 Not to Wilfully Prevent or Hinder the Agent from Earning His Commission

 The agent’s right to commission is not affected even of the transaction has not been beneficial to the principal or if the transaction has subsequently fallen through no fault of the agent.  E.g.: A principal cannot employ a 2nd agent to do the same act as the first agent. This is to protect the 1st agent from not getting the commission that has been promised to him by the principal.

4.6.3 To Indemnify & Reimburse The Agent for Acts Done in The Exercise of His Duties

 The principal is obliged to indemnify or reimburse the agent for costs incurred in carrying out the agency relationship.  The agent only has a right to be indemnified for authorized transactions.

Solloway & Anor v Mclaughlin

Facts: The Privy Council held that agents who engaged in a fraudulent scheme to defraud the principal would not be entitled to be given indemnity, in regards of transaction which was formed out of the fraud.