Whether a commission is payable or not depends on the terms of the agreement between a principal and thus in the case of Taylor Vs Brewer (1813) the agent was to receive such commission as should be deemed right by the principal. It was held that the agent had no legal right to commission. Where the agency is commercial, courts would deem reasonable payment for the agent in the absence of express provision for payment. If the agreement stipulates that the amount of the commission is to be left at the principal’s discretion, and he refuses to fix the amount, then the court may force him to pay a reasonable amount. A commission is payable in respect of a transaction which the agent was employed to bring about. Thus in the case of Toulimin Vs Millar (1887) the owner of a house employed an agent to find a tenant who later bought the house. His claim for a commission on the sale of the house failed since he was only employed to let the house and not to buy the house. Therefore in every agency relationship, there must be an express or implied agreement to pay for agent’s trouble. However if the principal withdraws his instructions or refuses to continue with the contract, he is not liable for damages. A principal incurs no liability for discontinuing or selling off his business unless he had agreed to conduct his business as to enable the agent to earn his commission. In Turner Vs Goldsmith (1891) 1 QB 544, it was held that the plaintiff was entitled to damages where the premises of the principal were destroyed by fire if the contract was not confined to goods manufactured by the principal but even those sold by the principal.
Duty to indemnify the agent (Section 156)
Under the section, a principal shall indemnify an agent against the consequences of all lawful acts done by the agent in exercise of the authority conferred upon that agent. And where a principal employs an agent to do an act and the agent does the act in good faith, the principal is liable to indemnify the agent thus in the case of Adamson Vs Jarvis, the agent was indemnified by the principal for the losses incurred while acting on behalf of the principal. The general rule is that an agent who incurs liability or uses his money in performing the agency duties is entitled to be indemnified/compensated by the form his principal for all such expenses unless the agency contract excludes this right. However the agent’s right to indemnity is subject to two main qualifications: a) There is no right to indemnify unless the agent’s acts are authorized or ratified by the principal. b) No indemnity can be claimed in respect of an illegal act.
Duty to allow the agent exercise his right of lien.
The is entitled to a lien on all the property of the principal which has come in to his possession during the course of the agency until the commission is paid. Section 155 of the contract act provides that in absence of any contract to the contrary, an agent is entitled to retain the goods of a principal until the commission due to the agent is accounted for by the principal However the right to lien may be lost in the following ways By the agent voluntarily parting with possession of the goods A change in character of the possession may destroy the lien Where the agent waves it (where the agent decides not to exercise his right of lien ) Where the principal tenders (pays) to the agent the sum due Duty to cooperate. The principal must not hinder the agent’s ability to perform their duties. This includes providing necessary information and resources thus in the case of Parker v Mckenna, the court held that the agent had acted with in his authority and had not breached his fiduciary duties. The court emphasized that the principal had the duty to provide all necessary information to the agent and not interfere with his ability to perform duties effectively Duty to reimbursement The principal should reimburse the agent for any expenses incurred while performing their duties, provided these expenses are reasonable and necessary. Section 64 addresses that the principal is bound to indemnify an agent against the consequences of all lawful acts done by such agent in exercise of his authority. This ensures that the agent is not out of pocket for performing their duties on behalf of the principal
Remedies of a principal where the agent breaches his duties
a) Where the agency is contractual, the principal can sue the agent for damages for breach of contract b) Where the agent has received a secret profit or money for the principal, the principal can sue the agent to account for the money had and received by him secretly c) A principal can dismiss the agent who is guilty of breach of duty and is not bound to pay him compensation
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