Page 146 - Microsoft Word - 00 Prelims.docx

Chapter 5

Where the principal is undisclosed

An undisclosed principal is where the principal’s existence has not been
made known to the third party; in other words, the third party thought he
was dealing with the agent on his own behalf.

When the third party discovers the true position he can elect to treat the
principal or the agent as being bound by the transaction.

Agent’s fiduciary duty

An agent has a fiduciary relationship with his principal. This is a position similar to
that of a trustee. It has the following consequences:

 A must not allow his personal interests to conflict with those of P.

 A must always act in the best interests of P.

 A must not make a secret profit.

 A has a duty to account to P for all money and property received.

Where an agent is in breach of his fiduciary duty, the following remedies are
available:

 P can repudiate the contract with the third party.

 A can be dismissed without notice.

 P can refuse to pay any money owed to A or recover any money already paid.

 P can recover any secret profit made or any bribe.

142