The Duties of an Agent to Principal
THE DUTIES OF THE AGENTS TO PRINCIPAL
The duties of an agent depend primarily on the contract of agency if there is one. Subject to any such express terms, the agent owes a number of implied duties or obligations to his principal. It is the agency relationship as such that gives rise to these obligations so that, as a general rule, they fall as much on the gratuitous agent as on the paid agent.
1. Obey the Principal’s instructions Section 164 states,
The agent must obey the instructions given to him by his principal even if he thinks the instructions are wrong. Sometimes of course the principal may expect the agent to advise him and indeed he may be employing an agent to use skill and care. The agent must not delegate his duty to another person unless such delegation has been agreed with the principal, or is the custom of the trade, or the delegation merely takes pace in relation to purely administrative matters.
Case Example :
In Turpin v. Bilton (1843), an insurance broker agreed for consideration to obtain a contract of insurance on the plaintiff’s ship. But he failed to do so. The ship was lost and the broker was held liable to the plaintiff. In Fraser v. B. N. Furman (Production) Ltd (1967), insurance brokers agreed for consideration to effect an employer’s liability policy and failed to do so. The employer was held liable for $3000 damages in an action brought against him by an employee for breach of the Factories Act, and the Court of Appeal held that the brokers must indemnify the employer in that sum for breach of contract.
Betram Armstrong & Co. V. Godefray (1830) 1 Knapp 381
Facts : The agent was a stockbroker. The principal told the agent to sell stock when the market price reached a certain figure per unit of stock. The agent did not heed these instructions and held on to the stock. When the market dropped the agent was forced to sell at a loss.
Decision : The principal successfully sued the agent to recover the difference between the price at which
The duties of an agent depend primarily on the contract of agency if there is one. Subject to any such express terms, the agent owes a number of implied duties or obligations to his principal. It is the agency relationship as such that gives rise to these obligations so that, as a general rule, they fall as much on the gratuitous agent as on the paid agent.
1. Obey the Principal’s instructions Section 164 states,
The agent must obey the instructions given to him by his principal even if he thinks the instructions are wrong. Sometimes of course the principal may expect the agent to advise him and indeed he may be employing an agent to use skill and care. The agent must not delegate his duty to another person unless such delegation has been agreed with the principal, or is the custom of the trade, or the delegation merely takes pace in relation to purely administrative matters.
Case Example :
In Turpin v. Bilton (1843), an insurance broker agreed for consideration to obtain a contract of insurance on the plaintiff’s ship. But he failed to do so. The ship was lost and the broker was held liable to the plaintiff. In Fraser v. B. N. Furman (Production) Ltd (1967), insurance brokers agreed for consideration to effect an employer’s liability policy and failed to do so. The employer was held liable for $3000 damages in an action brought against him by an employee for breach of the Factories Act, and the Court of Appeal held that the brokers must indemnify the employer in that sum for breach of contract.
Betram Armstrong & Co. V. Godefray (1830) 1 Knapp 381
Facts : The agent was a stockbroker. The principal told the agent to sell stock when the market price reached a certain figure per unit of stock. The agent did not heed these instructions and held on to the stock. When the market dropped the agent was forced to sell at a loss.
Decision : The principal successfully sued the agent to recover the difference between the price at which