DUTIES OF THE PRINCIPAL TO THE AGENT

CONTENTS

1.0      Introduction

2.0      Objectives

• Main Content
• Duty to Remunerate
• Estate Agent’s Commission
• Duty to Re-Imbursement and Indemnity

4.0      Conclusion

5.0      Summary

6.0      Tutor-Marked Assignment

7.0      References/Further Readings

INTRODUCTION

As discussed in the preceding unit, parties  to  an  agency  relationship  have  corresponding duties which they owe one another failure of which either of them could make valid claims in the  law court  for breach of contract.  The  failure  to  perform  any  of these duties of or performing some negligently which result into one of the  other parties incurring loss is a ground for an action in damages.

OBJECTIVES

The major objective of this unit is to bring  to  the  knowledge  of  the  learner  those  duties a principal owes his agent which are either express or implied.

MAIN CONTENT

The major duty a principal owes his agent is premised on the issue of money and  pecuniary advantages accruable to the agent in the event of an effective discharge of his own duties under the contract. This also includes carrying out the principal’s instructions under the terms of the agency in respect  of his dealings  with third parties on behalf  of  the principal.

Duty to Remunerate

The primary duty of a principal to his agent is to remunerate him  for  the  services rendered. Such duties arise  whenever  the  agent  is  employed under  such circumstances as would reasonably justify the expectations that he should be paid.

The remuneration may take the form of an agreed commission or wages or other benefit agreed between the parties such as some share of the benefits accruing  to  the principal from the agency.

However, the duty to remunerate is not absolute for the  agent’s  right  to  receive  it  accrues only  if  he  is  entitled  to  it  in  accordance  with  the agency agreement  which will also include the amount payable, the conditions under which it becomes payable and the time of payment.

The right to reasonable  remuneration  may  sometimes  be  implied  from  the  express terms of an agreement, the custom and usage of the particular  trade,  business  or profession  of  the  agent  ,  w here  the  parties  operate  and   the   surrounding circumstance including any dealings between the parties  may  also  determine remuneration.

However, even when the duty to remunerate has arisen expressly or b y implication the agent’s right to it is further subject to certain conditions. These include:

1. the agent must have earned the   That is, when  the agent has done  all or substantially all he was obliged to do under the circumstances.
2. the agent   must   be   the  effective   cause   of   the   transaction    from which the remuneration accrues
3. the agent must fulfill the conditions, if any,  upon  which  the remuneration accrues
4. the  agent   must   fulfill   the   conditions,    if   any,   upon    which   the remuneration accrues.

SELF ASSESSMENT EXERCISE 1

It is an absolute right that an agent is entitled to his remunerations. Discuss.

Estate Agent’s Commission

Estate agents are a peculiar type of agents whose rights, duties and obligations are often spelt out  in  an  agreement,  mostly  Power  of  Attorney.  They  present  a  peculiar problem with regard to payment of commission  or  entitlement  from  their  principals.  This  is  primarily because  there  is   normally  no   obligation   on   the   estate   agent   to do anything  for  the  principal.  The  contract  with  the  latter  is  merely  a  promise binding on the principal to pay a sum of money upon the rendering of specified service by the estate agent.

In some cases, an instruction or agreement as to when any commission becomes payable ma y be given or concluded in one of various ways:

1. on the estate agent introducing a buyer
2. on finding a buyer or someone to BUY
3. on introduction of a person who signs or enters into a legally binding contract to purchase

SELF ASSESSMENT EXERCISE 2

Estate agent’s commission are payable as of right. Discuss.

Duty of Re-Imbursement and Indemnity

In every agency relationship, there is by implication, a duty on the principal to indemnify the agent of all loses, damages or liabilities sustained by the agent in the course of discharging his authorized duties. This implied duty is subject to  any  subsisting agreement or declared intention of the parties. All reasonable expenses incurred by the agent and any incurred b y him when he engages the services of a sub-agent or substitute with the approval of the principal are payable.

Exceptions

• where the  parties  provide  in  their  agency  relationship  for  the payment of some kind of remuneration the right to indemnity or re-imbursement may be superseded
• where the right of the agent to indemnity or re-imbursement is expressly provided for by the parties in their agency agreement

The agent will not be entitled to this right in any of the following conditions:

1. where the agent acted  without  express  or  implied  authority, unless  the transaction is subsequently ratified by the principal or any other person authorized by him to do so
2. where the agent incurred the expenses, loss or liability in consequence of his own negligence, default or insolvency
3. where the agent has acted in breach of his duty, including violation of any principal’s lawful or reasonable instructions
4. where the  agent   acted   in   respect   of a  transaction   that is to his knowledge unlawful or contrary to public policy
5. where the agent acted in respect of any transaction rendered null and void by any statute

SELF ASSESSMENT EXERCISE 3

An agent is entitled to re-imbursement of his incurred expenses and indemnity in all situations. Do you agree?

CONCLUSION

As noted earlier, the basis of any agency is for  the principal  and the agent  to  perform  their respective duties both expressly and  impliedly. The  duty of  a  principal  is  to  pay the various monies accruable to the agent on the fulfillment of the agency conditions provided his action does not fall under any of the known exceptions.

SUMMARY

This unit has revealed to the learner the duties  a principal  is obliged  to perform to his agent which are as follows:

1. Remuneration
2. Estate Agent’s Commission
3. Re-imbursement and Indemnity

TUTOR-MARKED ASSIGNMENT

The major duty of a principal to an agent under an agency relationship is premised on the monies accruable to the agent under the contract of Agency. Discuss

REFERENCES/FURTHER READINGS

Kingsley Igweike, (1993). “Nigeria Commercial Law: Agency.” Jos, Nigeria: FAB Educational Books.

Markesinis  and Munday, (1986).    “An Outline of Agency.” 2nd Edition. Pollock and Maitland. “The History of English Law,” Vol. 11.

Sir William Holdsworth, “A History of English Law,” Vol. IV.

Friedman,   G.H.L.   (1984).    Law   of   Agency,   7th     Edition. London: Butterworths.