The rights and duties of the agent 173The duty to account
This duty requires that the agent keeps his own property separate from the principal’s prop-
erty. If the agent mixes the two up, the principal will be entitled to all of the property unless
the agent can clearly show what property belonged to him. The duty also obliges the agent
to keep records which the principal can ask to inspect.
The duty to preserve confidentiality
Agents have a duty to keep the affairs of their principals confidential, and this duty can
carry on after the agency has ended.
Remedies for breach of fiduciary duties
The fiduciary duties are very strict indeed. If any of them are breached the principal is given
very wide remedies. Potentially, these rights include:
(i) the right to dismiss the agent without notice;
(ii) the right to refuse to pay the agent’s commission;
(iii) the right to recover any secret profit; and
(iv) the right to rescind the contract (see pp. 94 – 6) which the agent made with the third
party.
If the agent takes a bribe, the principal can in addition either recover the amount of the bribe
or claim for any loss suffered as a result of the bribe. If the amount of the bribe is invested
by the agent, and increases in value, the principal can recover these profits as well. This is
because a bribe, like a secret profit, can be regarded as having been held by the agent on
constructive trust for the principal. In Attorney-General for Hong Kongv Reid (1993)an
agent who took bribes invested the money in property. This property increased in value and
the principal was held by the Privy Council to be entitled to the proceeds of the bribe and
the profits made from it. The extent to which these remedies are available is at the court’s
discretion and will depend upon how dishonestly the agent acted.
Rights of the agent
The agent’s contract with the principal may expressly provide that the agent should be paid.
If this is not the case, then the agent will not be entitled to payment unless an implied term
gives such a right. Such a term will be implied on the same basis as any other term implied
by the courts. (The circumstances in which a term will be implied by the courts were exam-
ined in Chapter 3 at p. 73.)
Re Richmond Gate Property Co Ltd (1965)The articles of association of a company set out the remuneration of the managing director.
The relevant article provided that the managing director should receive ‘such remuneration
(whether by way of salary, commission or participation in profits, or partly in one way and
partly in another) as the directors may determine’. The company went into liquidation nine
months after incorporation. The managing director had been paid nothing during this time
and claimed £400.
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