4.7 Duties and Rights of An Agent

4.7 DUTIES AND RIGHTS OF AN AGENT

 The duties of an agent are summarized as follows:

1 • To obey the principal's instructions.

2 • To act according to custom when instructions are not given.

3 • To exercise care, skills and diligence.

4 • To render proper accounts when required by the principal.

5 • To pay to his principal all sums received on behalf of the principal.

6

• To communicate with the principal.

7 • Agent must not let his own interest to conflict with his duty.

8 • Not to make any secret profit out of the performance of his duty.

9 • Not to disclose confidentail information or duments entrusted to him by his principal.

10 • Not to delegate his auhority.

4.7.1 Section 164 CA 1950 - To Obey the Principal’s Instruction

 An agent must follow the instruction of the principal. If agent does not follow, it is a breach of contract.  An agent only has to follow the instruction if it lawful.

Turpin v Bilton

Facts: The agent has been instructed by the principal to get the insurance for his vessel. The vessel lost and as result the principal has to bear some loss.

Held: The agent is liable for breach of duty. Due his failure to obey the principal’s instruction. The agent is liable to pay compensation for the loss.

4.7.2 Section 164 CA 1950 - To Act According to Custom When Instructions Are Not Given

 In the absence of instruction from the principal, the agent must act according to the customs (normal), in doing business, at the place where he carries on his work.

4.7.3 Section 165 CA 1950 - To Exercise Care, Skills and Diligence

 An agent must exercise care, skills and diligence in carrying out his work and to use such skills as he possesses.

Keppel v Wheler

Facts: D (agent) was employed to sell the Principal’s house. An offer was received & accepted by the Principal’s subject to contract. Later, higher offer for the same house was made by X but this offer was not communicated to the Principal by D. Contract been made with 1st offer.

Held: D was liable to P for differences of 2 offers.

4.7.4 Section 166 CA 1950 - To Render Proper Accounts When Required by the Principal

 An agent is under a duty to account for all monies and property handled by him as agent for the principal and to produce such accounts when demanded by the principal.

Lyell v Kennedy

Facts: An agent who has been entrusted with the principal’s money/property is bound to keep the money/property separately from his own property.

4.7.5 Section 171 CA 1950 - To Pay to His Principal All Sums Received On Behalf of the Principal

 Agent must give the principal the money that he received on behalf of the principal.  Agent however, before giving all the monies, may deduct the followings; i. Advances paid by the agent ii. Agent’s commission

iii. Agent’s remuneration.

4.7.6 Section 167 CA 1950 - To Communicate with the Principal

 Agent must try his best to communicate with the principal.  In the situation when this is not possible, e.g. in cases of emergencies, the agent must use his discretion to the best interest of the principal.

4.7.7 Section 169 CA 1950 - Agent Must Not Let His Own Interest to Conflict with His Duty

 The duty of an agent is to act solely for the benefit of the principal and he cannot allow his own personal interest to conflict with this duty.

Wong Mun Wai v Wong Tham Fatt

Held: Defendant has breached his duty as agent to the Principal on 2 reasons; i. He sold the P’s share of land below the market price ii. He failed to inform the P that he had sold it to his wife

Agent couldn’t use his position to gain profit at the Principal’s expenses

4.7.8 Section 168 CA 1950 - Not to Make Any Secret Profit Out Of the Performance of His Duty

 Secret profit means a bribe or payment of a secret commission or any financial advantage which an agent receives and above the commission or other remuneration agreed by the parties.  If the principal knows about the secret profit and consents to it, the agent is entitled to keep the profit he makes since the profit is no longer secret.  However, if the profits are secret, then the principal may do the following:

Actions That Could Be Taken By the Principal

1. Sec. 168 - Repudiate the contract

2. Principal may dismiss the agent on the ground of breach of duty

3. Recover the amount from the agent

Case: Tan Kiong Hwa Vs. Andrew S.H Chong

P bought a flat from a company. D (agent) was a director of that company. P ordered D to resell the flat house at the price of RM45,000. However, D managed to sell it at RM54,000 and the extra of RM9,000 was credited into D’s company account. Held: P was entitled to claim the extra RM9,000 from D (breach of duty)