The Gazette 1988

DECEMBER 1988

GAZETTE

indemnified for liabilities incurred while acting within the scope of implied authority. Decided case law supports the proposition that an agent who mistakenly (but reasonably) makes a payment to a third party is entitled to reimbursement and indemnity. 29 If an agent is entitled to be indemnified in respect of the expenses of litigation then the scale of reimbursement is that of cost on a common fund basis and not simply party and party. 30 Agents generally have the rights of reimbursement and indemnity but del credere agents do not have these rights. (b) S i t u a t i o ns In general, an agent is entitled to be both reimbursed and indemnified but there are situations where the agent can lose these rights. An agent has no rights to reimbursement or indemnity where the agency agreement expressly or impliedly excludes it. 31 Re s t r i c t i ons (a) Ag e n ts

C i r c ums t a n c es There are a number of circum- stances in wh i ch the rights arise. The principal is normally under a duty to reimburse and indemnify the agent for all liabilities incurred while acting within the scope of the authority conferred by the principal. 22 The expenses and liabilities must have been actually arisen. 23 The principal does not have to i n d emn i fy t he agent aga i nst imaginary liabilities. The principal must reimburse and i ndemn i fy the agent n o t w i t h- standing the fact that the principal could not be made personally liable for the expenses or liabilities. 24 The agent does not have to be legally ob l i ged to meet t he expenses and liabilities. 25 A principal is obliged to indemnify and remunerate an agent not only for expenses legally incurred but also for some expenses wh i ch the agent was morally (but not legally) obliged to incur. Rhodes -v- Fielder, Jones and Harrison 26 is a case in point. The client instructed his solicitors not to pay counsel's fees. Counsel would not have been

entitled to sue for the fees but it would have been a matter of professional misconduct for the solicitors not to have paid the fees. Lush J. held that the principal (the client) was obliged to indemnify the agent (the solicitors) for the fees which it paid to the third party (the counsel) notwithstanding that it was not legally obliged to do so. The agent's normal rights to reimbursement and indemnity may be extended and enlarged by a custom existing in the particular trade in which that agent operates. If it can be established that there is a custom that agents are re- imbursed and indemnified in that particular trade in a way wh i ch is not normal in other trades and that custom is reasonable then the agent is entitled to the rights which are customary in that trade. 27 If such a custom can be established but it is found to be an un- r easonab le c u s t om t h en t he principal will only be entitled to reimburse and indemnify the agent where the principal knew of the custom. 28 An agent is entitled to be reimbursed for expenses or

FOR ALLYOUR COMPUTER REQUIREMENTS

LEGAL ACCOUNTS • TIME-RECORDING • WORD PROCESSING EXPERT SYSTEMS • PRECEDENT LIBRARIES • DATA BASES SINGLE AND MULTI SCREEN SYSTEMS

SOFTWARE AVAILABLE ON A LL IBM COMPATIBLE MACHINES COMPREHENSIVE TUITION PROVIDED ON A LL SYSTEMS RELIANCE BUSINESS SYSTEMS LTD; 2 Leeson Park, Ranelagh, Dublin 6. 01-797362/771333 Springville House, Blackrock Rd., Cork. 021-313940/314013

Authorised Wang Dealer

3 18