Agency Duty towards principal

(a) With reference to the provisions of the Contracts Act 1950, describe three (3) duties of an agent towards his principal in the absence of an express contract of agency. (8 marks)

(b) A contract of agency may be expressed or implied from certain circumstances and conduct of the parties. Explain two (2) of the ways in which a contract of agency may arise. (6 marks)

(c) Bob engaged Steve to sell a few units of computer tablets which they both knew are fake reproductions of a popular and reputable model. Bob agrees to indemnify Steve against any consequences that may arise from the sale. Acting upon this agreement,

Steve started selling the computer tablets, representing it as the ‘real thing’. During one of his transactions, Steve was arrested by the authorities for selling fake merchandise and passing it off as the original. Steve was found guilty and fined RM100,000 which he paid. Steve now wants to recover the RM 100,000 from Bob as his principal.

Advise Steve.

(MIA QE 2012/9 Q2, 20 marks)

(a) Three (3) duties of an agent towards his principal is posted here among S.164 - 174 of Contracts Act, 1950.

(b) 2 ways of appointment of an agent are:

  1. By Express Appointment
  2. By Implied Appointment
Similar question was asked in:

MIA QE 2008/9 Q3 (a) with termination.
MIA QE 2009

MIA QE 2010/9 Q4 (e)
MIA QE 2011/3 Q4 (a)
MIA QE 2014/9 Q2 (a)
MIA QE 2015/3 Q2 (a)

(c) Bob and Steve are engaged in unlawful act of selling fake computers.

Similar case on Principal's indemnity to Agent who has engaged in unlawful act:

MIA QE 2011/3 Q4 - Raz and Bakar.

MIA QE 2012/9 Q2 - Bob and Steve.
MIA QE 2013/3 Q2 - Man and Parjo.
MIA QE 2014/3 Q1 - Mello and Ijan.
MIA QE 2014/9 Q2 - Messa and Jojo (more complicated)
MIA QE 2016/3 Q2 - Prinse and Ejan

Earlier posts on MIA BCL.