The Gazette 1986

GAZETTE

sepTemBER

1986

The Duties of An Agent to a Principal

Parti

by Vincent J. G. Power, B.C.L (N.U.I.), LL.M. (Camb.),

Faculty of Law, University College Cork

Kieran H. Hughes, Barrister-at-Law

The aim of this article is to enumerate and elaborate

upon the duties of an agent.

(a)

Sources of Duties

The duties of an agent (1) arise from three principal

sources: first, the agency agreement itself; secondly, the

nature of the agency relationship; and, thirdly, the area

of business (e.g. estate agency).

In respect of the first source, there are various duties

which might be expressly stated in the agency agreement

and then there are others which are implied into the

agreement by law (in the absence of any permissible

express exclusion). These implied duties are often

dependent on whether the agency is for consideration or

merely gratuitous.

In regard to the second source, since agency is a

fiduciary relationship (i.e. a relationship of the utmost

good faith

, an agent has a number of fiduciary duties

(often described as "duties of good faith" or "duties of

fidelity").

Finally, both statute and common law provide rules

on specific types of agency — one prominent example

being estate agency.

(b)

Scope of this article

Although the starting point for determining the duties

of an agent in a particular agency is the instant

agreement itself, there are certain duties which can be

implied into all agency agreements (in the absence of

any express permissible exclusion). It is these implied

duties, as well as the fiduciary ones, which are the

subject-matter of this article. Thus the article deals with

the duty to act, duty of obedience, duty of exercising

care and skill, duty not to delegate (i.e., duty of

personal performance), duty to respect the principal's

title, duty to account, duty not to make secret profits

and duty not to accept bribes or secret commission. By

way of conclusion, the article will look at the remedies

open to a principal where there has been a breach of

these duties by an agent.

DUTIES

Duty to Act

It has often been written that the fundamental duty of

an agent is to perform the agreed undertaking. But the

nature and extent of this duty depends on whether or

not the agent is a contractual (paid) agent, or a non-

contractual (gratuitous) agent.

(a)

paid agents

A person is a paid agent not only where he or she has

already been paid by the principal, but also where the

agent acts in expectation or contemplation of a

commission.

The fundamental duty of a paid agent is to act: the

agent is obliged to perform the agreed undertaking

or,

at the very least, to inform the principal that the agreed

undertaking will not be performed because of a change

of mind by the agent. Thus, if the principal suffers any

loss due to the agent's non-feasance, then the principal

can recover that loss from the agent.

A case in point is

Turpin

-v-

Bilton.

The Plaintiff shipowner retained the

Defendant insurance broker to effect a marine

insurance policy on a ship. The broker failed to do so.

After the ship was lost, the Court held that the ship-

owner was entitled to recover damages from the agent to

compensate for this loss.

A paid agent who decides not to act is obliged to

inform the principal immediately of this change of

mind.

(b)

gratuitous agents

The position of gratuitous agents has always been

more complex than paid or contractual agents. There is

a considerable body of early case-law which held that a

gratuitous agent is under no obligation to do any

positive

act on behalf of the principal.

In more recent

times, it has however been suggested that a gratuitous

agent who decides not to act should be obliged to

inform the principal of this change of mind. This would

allow

the

principal

make

"alternative

arrangements."

Murdoch comments": "Whether

such an obligation would be imposed by the courts is a

matter of conjecture for, while a duty not negligently to

misinform

someone is fairly easy to establish

, the law

requires rather stronger reasons before imposing a

positive

duty to inform. "

It is beyond any doubt that a gratuitous agent who

decides

to act will be liable for any work done

negligently or badly. In

Wilkinson

-v-

CoverdaleJ

the

Defendant gratuitous agent renewed a fire insurance

policy for the Plaintiff principal. The policy was in the

agent's name and he failed to have it endorsed to the

principal. The premises were burnt down and the

principal was unable to recover on the policy. The court

was adamant that if the Defendant had been shown to

have undertaken to effect the insurance then he would

have been liable for his negligent performance of the

undertaking.

(c)

agents in general

An agent will not be held liable for a failure to act

where that act would be either illegal

or null and

void.

Cohen

-v-

KittellJ

a turf commission agent

who agreed to place bets for the principal (at a

commission of two and a half per cent) failed to place

bets for his principal but was held not liable to the

principal for the "winnings" because those "winnings"

would in any event have been irrecoverable at law.

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