The rights and duties of the agent 171The duty to obey the principal’s instructions
An agent who makes a contract, agreeing to perform certain duties, will be liable in
damages if he fails to do what he agreed to do. Even agents who have no contract with their
principals because they are not being paid must perform the instructions given by their
principals. Agents who are not paid are known as gratuitous agents.
The duty to show an appropriate amount of care and skill
The common law requires an agent to show an appropriate degree of care and skill. Where
an agent supplies a service in the course of a business, this requirement is set out in s. 13 of
the Supply of Goods and Services Act 1982. The precise degree of care and skill required
of an agent will depend upon several factors, including any expertise which the agent has
expressly or impliedly claimed to have. For example, if a professional person, such as a
solicitor, is employed as an agent, he should show the degree of care and skill which one
could reasonably expect of a solicitor.
A gratuitous (unpaid) agent has no contract with the principal because the principal has
given no consideration to the agent. In the following case a gratuitous agent was held liable
for failing to show an appropriate amount of care and skill.
The duty to perform the agency duties personally
Delegation of the duties which the agent has undertaken is allowed only if the principal
expressly or impliedly authorised it, or if the act delegated required no care and skill.
Directors’ duties
The relationship of the agent to the principal is afiduciaryone, which means that the prin-
cipal places great faith and trust in the agent. This fiduciary nature of the relationship places
extra, fiduciary, duties on the agent.
These fiduciary duties are:
(i) To act in good faith and to avoid any conflict of interest.
(ii) Not to make a secret profit.
(iii) Not to take a bribe.
(iv) The duty to account.
(v) The duty to preserve confidentiality.
Chaudry vPrabhakar (1988) (Court of Appeal)The principal had just passed her driving test. She asked her friend, the agent, to look out
for a car. The principal specified that she did not want any car which had previously been
in an accident. The agent had no mechanical expertise and was not being paid for his
services. He recommended a car which was being sold by a firm of panel beaters. The prin-
cipal bought the car, asking the agent whether it had been in an accident. The agent said
that it had not. The principal later discovered that it had previously been in an accident and
sued both the agent and the panel beaters.
HeldThe agent was liable for not exercising reasonable care. The standard of care
required of an agent is the standard which is reasonable in the light of all the circumstances,
whether the agent acted under a contract or not.