1. Duties of the agent to the principal
An agent has two main
duties namely;
a) Duty
to perform all the duties imposed by the agency agreement;
b) Fiduciary
duties
a)
Duty to perform all the duties imposed
by the agreement
An agent must perform
with reasonable care and skill the duties allotted to him by the agreement. The
agent must also observe any reasonable and lawful instructions given by the
principal. He must also act within the scope of his actual authority. Breach of these duties will entitle the principal to the normal remedies available for breach of contract including
damages
b)
Fiduciary duties
The law treats an agent
as a fiduciary. An agent should therefore fulfill the duties which equity
imposes on fiduciaries. These duties include;
-
the duty to act towards P loyally and in
good faith;
-
to keep and be prepared to ender
accounts of his dealings;
-
to subordinate his own interests to
those of P;
-
to avoid conflict of interest between P
and other principals;
-
to refrain from using his position as
agent to acquire for himself property, contracts, business opportunities or
other benefits which he ought to do so for P;
-
to keep money and other assets received
for or for the principal separate from his own;
-
to be a trustee of P’s property
The extent to which the
fiduciary duties apply will vary depending on the circumstances of the agency agreement. The remedies for breach of fiduciary duties vary according to the
circumstances. They include personal remedies such as;
- an account and payment of monies
received for P;
-
compensation by way of equitable debt
for loss caused to P; and
- confiscation of a bribe or secret
commission received by A.
The principal can also have
recourse to remedies for the enforcement of proprietary rights such as a
constructive trust of money or other assets received for P and the proceeds of
P’s property which A has misapplied.
2. Duties of the Principal to the Agent
The duties a principal
owes to the agent are determined by the express or implied terms of the
agreement. The following are some of the duties;
a) the
principal must act dutifully and in good faith;
b) in
case of a commercial agency, the principal should provide his agent with the
necessary documents relating to the goods concerned;
c) the
principal must inform his agent within a reasonable period of his acceptance or
refusal of a contract procured by the agent;
d) to
reimburse the agent agreed or reasonable expenses incurred in the performance
of his duties; and
e) to
indemnify the agent against liabilities incurred in the performance of his
duties.
Whether an agent is
entitled to remuneration for his services depend on the express or implied
terms of the agency agreement.
Agent will be entitled
to the following remedies where the principal breaches his duties;
-
action for unpaid remuneration and
expenses;
-
agent can exercise the right of lien
over any property of the principal in his possession to secure payment of what
is owed to him.
3. Liability of the principal to third parties
If
an agent acts within the scope of his authority, a principal is bound by the
acts of the agent. The liability of the
principal to a third person upon a transaction conducted by an agent is based
upon facts such as;
- the agent was expressly authorized;
- the agent was apparently authorized; or
- the agent had a power arising from the
agency relation and not dependent upon express or apparent authority.
Third parties are entitled to assume
that agents holding a particular position have all the powers that are usually
provided to such an agent. Unless the limitations of the agency are known or
can be readily ascertained, the principal is bound by the unauthorized acts of
an agent through which a third party has sustained a loss.
Principal will no longer be liable
for a particular act after the third person has notice of the principal’s
repudiation of the agent’s authority to do such an activity. Moreover, after
the termination of an agency for a particular purpose and notice of the
revocation of the agency, the acts of the agent will not bind the principal.
4. Liability of the agent to third parties
However,
there are circumstances when the
agent will be personally liable and
able to enforce a contract against a third party.
- when he intended to undertake personal liability – for example where he
signs a contract as party to it without signifying that he is an agent.
-
Where it is usual business practice or trade custom for an agent to be liable
and entitled.
-
Where the agent is acting on his own behalf even though he purports to act for a
principal.
Moreover,
where an agent enters into a collateral
contract with the third party with whom he has contracted on the principal's
behalf, there is separate liability and entitlement to enforcement on that
collateral contract.
4.1. Breach of warranty of authority
A
person who acts as an agent is taken to promise the third party that he does
have authority, and that the principal will be bound. If an agent lacks
authority or exceeds his powers so that the principal is not bound, the third
party can sue the agent for damages for breach of warranty of authority.
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