Common Law Rights of the Agent Flashcards
Re Richmond Gate Property Co. Ltd. [1965]
If agency is a contractual one (i.e. not gratuitous) agent has RIGHT TO COMMISSION from the principal, in accordance with the express or implied terms of the contract.
But the reported cases show a marked attitude to construe such contracts strictly: A general anti-agent bias in the case law:
For example, if the agent agrees to be paid commission entirely at the discretion of the principal (as here) and the principal determines that no commission shall be paid, the court will not intervene.
William Lacey (Hounslow) Ltd v Davis [1957]
If there is no express term in the agency contract as to remuneration, the agent MAY be entitled to a reasonable sum (quantum meruit) by way of commission.
Will be applied where the acts are purported to be done on the faith of an agreement which is supposed to be. but is not a binding contract between the parties.
I.E. that the agent was expecting to get commission and his services were accepted by the principal on this basis, even though commission was never actually contractually agreed.
George Trollope & Sons v. Martyn Brothers [1934]
MUST the principal give the agent the opportunity to earn commission and, if he does something which prevents the agent earning commission, does principal commit a breach of contract?
General answer seems to be no - absent an express or implied contractual term to the contrary.
But in this easly case, C of A held; whree an estate agent introduced a purchaser to the principal and the principal unreasonably withdrew from negotiations with that party, the principal was liable for breach of contract - there was an implied term in the agency contract that principal won’t deprive agent the chance of earning commission.
Scrutton LJ dissented.
This was a very pro-agent decision - later authroties go against it (e.g. Luxor (Eastbourne) Ltd. v. Cooper).
Luxor (Eastbourne) Ltd. v. Cooper [1941] AC 108
H of L held; no term that agent is ENTITLED TO EARN COMMISSION was to be implied in estate agency contracts and the principal could withdraw his instructions at any time before the event has occurred which entitles the agent to claim commission (usually, completion of a sale) without incurring any liability.
H of L also held; non-revocation of the agent’s authority is not an implied term of the ageny contract.
Case has confused reasoning but seems to lay down general rule that principalcan revoke agent’s authority without incurring any liability even if the effect of that is to deprive the agent of the opportunity to earn commission.
L. French & Co. Ltd. v. Leeston Shipping Co. Ltd. [1922]
A term to the effect that the principal won’t revoke the agent’s authority or do something to preevnt him earning his commission will only be implied if it essential to make the contract work - to give it business efficiacy.
Here, shipowner had 18 month charterparty with charterer. The agent who had arranged it for him was paid monthly. Shipowner sold the ship to a third party 4 months in, meaning his agent could no longer get commission for remaining 14 months.
H OF L Held; NO implied term preventing shipowner from doing this, even though it had effect of reducing amount of commission his agent was entitled to.
Such a term would not have been necessary to give the agency contract business efficiacy.
Reinforces gist of Luxor (Eastbourne) v Cooper.
Alpha Trading Ltd. v. Dunnshaw-Patten Ltd. [1981]
Here, commission was not payable on the MAKING of a contract between principal and third party, but rather on the PERFORMANCE thereof.
Agent introduced to principal a willing buyer for his cement; principal agreed to pay agent comission on performance of his contract with the buyer.
But principal failed to deliver cement.
Q: did the principal’s failure to perform the contract constituted a breach of an implied term?
C OF A HELD; YES.
Implied term that principal wouldn’t commit a breach of his contract with the third party that would deprive the agent of his commission, once agent had already fulfilled his duties.
Agent could recover damages equal to what the commission would have been had principal performed his contract.
Principals ought not to be free to resile from their obligations to their agents once the agents had performed their agencies.
Distinguishable from Luxor; L French v Leeson - ‘performance’.
Summary of law relating to agent’s right to commission
Net effect of all these cases seems to be that, if the commission is payable upon the making of the contract (which will usually be the case) there will normally be no implied term preventing the principal from withdrawing from negotiations or revoking the agent’s authority without compensating the agent.
But where commission is payable upon the performance of a contract which the agent has negotiated, there is an implied term entitling the agent to commission if the principal fails to perform.
Adams v. Morgan & Co [1924]
An agent has a RIGHT TO AN INDEMNITY against all losses and liabilities incurred by him while acting within the scope of his authority, and to be reimbursed for his reasonable expenses.
This right may arise from an express term but is more usually implied - cam however be excluded.
A lot depends on what agent is contracted to do and the nature of his activities.
Here, agent liable to pay ‘super tax’ in the course of his management of the principal’s business.
Held; principal was bound to indemnify the agent against this liability even though the principal (a limited company) could not itself have been assessed on the tax.
Thus, a principal’s obligation to indemnify his agent may extend beyond things for which the principal himself would or could be personally liable.
Rhodes v. Fielder, Jones and Harrison (1919)
An agent may be entitled to be indemnified by the principal not only in respect of disbursements the agent is legally liable to make in the performance of his agency but also for liabilities which he has a strong MORAL DUTY to settle.
Agent of country solicitor paid a fee to counsel which principal had ordered them not to pay - back then, counsel's fee was regarded as an 'honorary, upper-class tip' - moral duty. Held; agent entitled to be reimbursed even though counsel would not have been able to sue for his fee - it was a moral payment only.
Anglo Overseas Transport Ltd. v. Titan Industrial Corporation Ltd. [1959]
Agent’s right to indemnity may also arise out of a custom of the trade in question.
E.G. here, a shipping agent who had booked space for his principal’s goods and had, according to the custom of the London freight market, paid for space not actually taken up, was entitled to indemnity from the principal.
Bayliffe v. Butterworth (1847)
An unreasonable custom to indemnify only binds the principal if he has actual knowledge of it.
Here, principal authorised his agent, a broker on the Liverpool Stock Exchange, to sell shares for him.
The agent sold the shares to a third party but failed to deliver them.
The agent compensated the third party and trade custom dictated that he could be indemnfied by his principal for this.
Held; agent could recover even though this trade custom was unreasonable, because he had actual knowlege of the custom.
‘The Tzelepi’ [1991]
Barron v Fitzgerald (1840)
Authorities that the principal is not bound to indemnify the agent in respect of liabilities incurred outside the scope of his authority.
Lewis v Samuel (1846)
An agent may not claim an indemnity in respect of expenses and liabilities incurred through his own fault.
Agent’s Right to Lien + Requirements
Lien is the right of a person to retain possession of goods owned by another until the possessor’s claims against the owner have been satisfied.
An agent has a lien on the goods and chattels of the principal in respect of all claims which he may have arising out of the agency - mere possessory right to principal’s goods - not proprietrary right - so agent NOT entitled agent to sell or dispose of the goods.
May be particular or general.
Particular (special) applies in respect of specific claims only.
A general lien gives agent right to retain goods of principal in respect of all claims which agent has against the principal.
REQUIREMENTS for right to lien to arise:
(1) Agent must have actual or constructive possession of the principal’s goods.
(2) Agent must have acquired possession in his capacity as agent
(3) Agent must have acquired possession lawfully and if he acquires it in breach of his relationship with the principal, no lien arises
Bryans v. Nix (1839) 4 M. & W. 775
For agent to have right of lien, actual must have actual or constructive possession of the principal’s goods.
Constructive possession will arise when the agent holds documents which acknowledge that the goods are being held for the agent by a third party. E.G. a bill of lading or a delivery order.
