Duties of an Agent to a Principal

Duty to Perform

The primary duty of an agent particularly where he was appointed under an agreement with the principal is to execute his agency in accordance with the terms of such agreement.

However, where the agent fails to perform his duties or to do so in accordance with the terms of his contract, he is generally liable only for the breach of his agency agreement. If he performs such duties carelessly or in an imperfect manner and thereby causes loss to his principal, he may in addition become liable in negligence. Such liability may take the form of an action for damages for the loss suffered by the principal, or an indemnity or contribution from the agent in favour of the principal.

To add to the former, his duty to perform is not absolute. If he was unable  to  perform his duty, he must promptly inform his principal or any other person having authority to receive such information.

Also, if the duties are illegal, he is not bound to perform then. If he is  also a gratuitous agent, he will not be liable for breach of duty to  perform.

Duty of Obedience or Loyalty

When an agent is executing the terms of his agency, he is obliged  to carry out such instructions as may be given to him by the principal relating thereto. In Eso West African INC. V Ali (1968)  N.M.L.R 414  an Ibadan High Court held, inter alia, that it is the duty of an agent to carry out any instructions that may be given to him by the principal and cannot depart from such instructions even though he reasonably believed that in doing so he was promoting the interest of the principal.

Exceptions

                     i.            Where no definite instructions has been given to the agent, or where such has been given, but this leaves the agent a measure of discretion, he would only be expected to be guided by the reasonable and honest exercise of his own judgement and the interest of the principal. If he is therefore so guided, he incurs no liability even if the principal suffers a loss by their exercise.

                    ii.            If the principal’s instruction is ambiguous, the agent is put to election and provided he acted fairly and honestly, he would not  be in breach of his duty of obedience and honesty even if the course chosen by him is less favorable to his principal.

   

                    iii.            If the agent is a professional agent the  principal’s  instructions may be subject to any custom or usage of the particular trade, business or profession to which the agent belongs or  within  which he operates.

Duty of Care and Skill

In the course of executing the terms of his agency, an agent is bound to exhibit such care, skill and judgment as are required under the circumstances of the particular situations. In Spiropolous Co. Ltd. V Nigeria Rubber & Co. Ltd (1970) N.C.L.R. 94, a High Court in Benin held that the prudence which an agent is expected to show in the affairs of his principal requires that he should not involve the principal in a heavier financial burden where there is available means of involving him in a higher financial burden. Accordingly, it was held that an agent who undertook to effect a policy of insurance on behalf of his principal is under a duty to do so at the most economical rate.

The degree of care, skill or diligence required of an agent may sometimes depend on whether he is a gratuitous agent or acting for reward. If he was acting for reward, a higher standard of care, skill or diligence is required of him. If he were a professional, agent or holds himself out as possessing a professional qualification, he must exhibit such car, skill or diligence as is usual or necessary or for the proper conduct of the trade, business or profession in which he is employed.

 However, if he holds himself out to the principal as possessing a special skill or knowledge, then he is obliged to exhibit such care, skill or diligence as would normally be shown by one possessing such skill or knowledge.

Duty of Personal Performance

The basic principle of law in this regard is covered by the maxim “Delegatus Non Potest Delegare” which means a delegated power cannot be further delegated. Agency relationship is one of  confidentiality of principal and the agent, and the agent is generally expected to perform his duties as an agent, personally.

In the realm of agency, an agent cannot entrust to another person or a sub-agent the exercise of an authority or duty entrusted to him by his principal without the latter’s express or implied authority to do so. In Bamgboye V University of Ilorin & Ors (1991)8 N.W.L.R. 1, the Court of Appeal affirmed that an agent to whom power is delegated cannot further delegate it without the express authority of the principal or authority derived from statute.

Duty to Act in Good Faith

This duty of an agent arises principally from the fiduciary nature or character of the principal-agent relationship. Agency relationship, as a whole, is based essentially on the trust reposed on the agent by the principal. The principal employs an agent normally because he requires that agent’s personal service or expertise. He will usually depend on the agent for the due performance of those services. The law imposes on the agent the duty to show good faith in his dealings on behalf the principal.

Duty to Account

It is a fundamental obligation of every agent to keep and to render appropriate account of his stewardship to his principal whenever he is called upon to do so. Thus he must be willing and ready at all times to render an account of all transactions undertaken by him for and on  behalf of his principal. This duty is more particularly important where money or property has been received for and on behalf of the principal.  In Majekodunmi V Joseph Daboul Ltd. (1975)2 C.C.H.C.J. 161 a Lagos High Court held, inter alia, that once the relationship of principal and agent is established, and the agent fails to keep proper account or fails to account to the principal for monies or properties received by him in the cause of his agency, he is accountable to such a principal and can be compelled to render such account by an action in a court for an account.

However, some individual obligations of the agent to his principal relating to the duty to account flow from the general duty to account. These are:

        a.      Duty to keep proper account.

      b.      Duty to make books and documents in his possession relating to the execution of the agency assessable to his principal.

       c.       Duty to keep his personal monies separate from his principal’s money.

    He is under a duty, if he holds money or property on behalf of his principal, to pay over or account for such money or restore such property to his principal notwithstanding claims made by third parties provided that the money or property was not received in respect of a void or illegal transaction or that the agency itself is not void or illegal.