Duties of a Principal to his Agent

The 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. Where 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 by implication the agent’s right to it is further subject to certain conditions. These include:

     a)      the agent must have earned the remuneration. That is, when the agent has done all or substantially all he was obliged to do under the circumstances.

      b)      the agent must be the effective cause of the transaction  from which the remuneration      accrues.

       c)      the agent must fulfill the conditions, if any, upon which the remuneration accrues.

       d)     the agent must fulfill the conditions, if any, upon which the remuneration accrues.

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 may be given or concluded in one of various ways:

                      i.            on the estate agent introducing a buyer.

                      ii.            on finding a buyer or someone to buy.

                iii.            on introduction of a person who signs or enters into a legally binding contract to purchase.

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 by him when he engages the services of a sub-agent or substitute with the approval of the principal are payable.

Exceptions

      a.      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.

      b.      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:

                    i.            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.

             ii.            where the agent incurred the expenses, loss or liability in consequence of his own negligence, default or insolvency.

                  iii.            where the agent has acted in breach of his duty, including  violation of any principal’s lawful or reasonable instructions.

                 iv.            where the agent acted in respect of a transaction that is to his knowledge unlawful or contrary to public policy.

      v.            where the agent acted in respect of any transaction rendered null and void by any statute.

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