Table of Contents

I. INTRODUCTION........................................................................................................................1

II. DUTIES OF AN AGENT...........................................................................................................2

III. CONCLUSION..........................................................................................................................5

REFERENCES................................................................................................................................6
 I. INTRODUCTION

These days, it's extremely typical to assign all or part of our authority to someone else, or to

designate someone else as our representative. Estate agents, commission agents, auctioneers,

brokers, barristers and solicitors are only a few individuals who may act on behalf of others. The

deeds people take on behalf of someone are called an agency relationship (Shapiro, 2005). This

is the relationship between principal and agent, which is still commonly believed to be basically

contractual (Dowrick, 1954). The relationship between an agent and a principal is crucial in

many facets of human interactions.

With the primary goal of establishing legal contacts between the principal and a third party, an

agent is explicitly or implicitly authorized to represent the principal. Essentially, they request

that the agent fulfill the principal's expectations by acting honorably within the bounds of their

authorized authority (Whitton, 2013). Agency is a partnership in which one party gives the other

permission to carry out certain tasks on the principal's behalf that impact the principal's

obligations and rights toward third parties (Turner et al., 2021).

Agents are intermediaries with a wide range of responsibilities in the vast landscape of

commerce and law. There are three different kinds of agents, special agents, universal agents,

general agents and they are categorized based on how much authority they possess. Each agent

has responsibilities to their principal that differ in intensity depending on the agency type or the

agency agreement's specifics. Although each agent's responsibilities vary, they all share the same

fundamental duties.

To better understand the duties of an agent, this paper will examine these duties under

Australian law. It entails going in-depth on each duty and examining its ramifications through

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relevant case law and illustrative examples. By examining the practical application of these

duties in various contexts, this paper will give readers a thorough knowledge of the duties that

regulate agents' conduct and their importance in upholding the integrity and trust that are

fundamental to the agency relationship.

II. DUTIES OF AN AGENT

First and foremost, every agent's foremost responsibility is to follow the principal's

instructions. An agent is given specific authority by the principal through the agency

relationship. However, this is never a limitless authority. Without following the conditions of an

agency contract, an agent is not eligible to receive remuneration. The agent will be held

accountable for the principal's losses, except in cases where they are unlawful, if they don't

follow the principal's orders. The obligation to obey the principal's orders will be clarified in

further detail by the case Turpin v Bilton [1843] 5 Man & G 455, in which Turpin was the

principal and Bilton was the agent. Bilton, an insurance broker, was given instructions by Turpin

to insure a ship against losses resulting from "the perils of the sea". Then, Bilton was unable to

get insurance. While traveling from Newcastle to Rio de Janeiro, the uninsured ship crashed into

a storm and washed away. Turpin filed a lawsuit against Bilton, requesting compensation. Bilton

violated the agency agreement since he did not follow Turpin's directions. As a result, Turpin

was reimbursed damages from Bilton for the loss he had incurred.

Acting in person is another duty that the agent has to complete. Every agent is required to act

in person, and they are not permitted to assign their agent responsibilities to another person

unless the principal specifically grants it, either explicitly or implicitly, or by specific usage. Due

to the demands of business, this regulation is loosened to allow the agent to designate a sub-

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agent and assign some of their powers in specific situations. For example, under corporate

business structures, the board of directors has the authority to act on behalf of the company. The

directors can designate sub-agents, like senior executives, who can then designate sub-sub-

agents, who are employees of the company with an agency role. In the case of De Bussche v Alt

[1878] 8 Ch D 286, an agent was hired by a shipowner to sell a ship in China, Japan, or India.

Since the agent was unable to sell the ship on his own, he authorized a sub-agent in Japan with

the principal's approval. Then, the principal met the sub-agent to provide detailed instructions.

The sub-agent subsequently purchased the ship for himself and profitably resold it to a third

party. The Court of Appeal held that as privity existed between the sub-agent and the principal,

thus the sub-agent was accountable for its profit and subject to liability.

The duty to act in good faith presumes that an agent holds a fiduciary role. When one person

exercises their rights and abilities in good faith for the benefit of another, they are said to be in a

fiduciary relationship. This obligation is strict and crucial. In any situation, the agent is

responsible for acting in the principal's best interests and ensuring that their own interests do not

collide with those of the main. The agent bears the responsibility of demonstrating that there was

no conflict of interest in the specific scenario. A buyer purchased property from a vendor in

Lintrose Nominees Pty Ltd v. King [1995] 1 VR 574 case, following the counsel of an agent for

which the buyer paid a fee. The buyer was uninformed that the vendor had hired the agent to sell

the property. Consequently, the buyer has the right to cancel the vendor's sales agreement.

Another duty that an agent has to do is that they must make full disclosure of any personal

interest. An agency representative is required to disclose to the principal any relevant

information that could affect the principal's decision to engage in a negotiation. The agent will

not be eligible for commission unless they provide such disclosure. When the principal discovers

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the real circumstances, they are entitled to recoup any profit earned by the agent as a

consequence of the non-disclosure. Take the case of Boardman v Phipps [1967] 2 AC 46 as an

example. Tom Boardman, a family trust lawyer, together with a beneficiary attempted to

purchase most of the shares in a textile firm. They bought the shares and dispersed capital

without lowering the value of the shares, even though not all beneficiaries gave their assent. The

trust gained £47,000, while they made £75,000 in profits. Yet another beneficiary, John Phipps,

sued them later, citing a conflict of interest and demanding their money back. They were

therefore accountable for making money off of trust assets.

Duty Not to Make a Secret Profit is the next obligation of an agent. They do not have

permission to make use of their position for personal benefit without the principal's knowledge

and consent. An agent has the right to the remuneration that was agreed upon, but he also has to

report to the principal any other benefits received. The case Shallcross v Oldham [1862] 2 Johns

& H 609 will illustrate this responsibility. The ship's owner, Shalicross, hired Oldham, the agent,

to serve as the master. After that, Oldham was instructed to make the most use of the ship. Due

to his inability to get freight for the vessel, Oldham packed it with his own cargo, sailed it to

Hong Kong, and then sold the cargo. Shallcross filed a lawsuit against Oldham as soon as he

realized this. Oldham was required to reimburse Shallcross for the money he gained from the

cargo transaction.

The last duty that an agent must have is to exercise reasonable care and skill. When working

for remuneration an agent is required to use the skill, care, and diligence in completing the task

as is usual or needed for the regular or appropriate operation of the company or profession in

which the agent is engaged. If the agency cannot utilize the necessary care and skill, the principal

may hold the agent accountable for any damages incurred by the latter due to the agent's

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negligence. As the case of Dorchester Finance v Stebbing [1977] BCLC 498, Stebbing was the

executive director of Dorchester Finance, a financial lending company, while Hamilton and

Parsons served as non-executive directors. Hamilton and Parsons did not often visit the

company. Although there were no board meetings, the other two directors signed blank checks

for Stebbing to use. Stebbing then utilized these to make illegal loans. They had breached their

duty, so all of them were responsible for covering the company's losses.

Apart from these main obligations, Australian law imposes further duties on agents to

safeguard the interests of the principal and maintain the integrity of the agency relationship. All

principal funds and property must be kept apart from the agent's own. Also, while serving as an

agent, they must maintain confidentiality about anything they know.

III. CONCLUSION

In summary, the duties placed on agencies by Australian law are critical to fostering ethical

and dependable dealings. It is very essential to the operation of a variety of sectors. Respecting

these duties is not only merely required by law, but also essential to maintaining Australia's legal

system's foundation of justice and building public trust. As the commerce landscape evolves,

agents must be alert in keeping their responsibilities while adjusting to new challenges and

opportunities.

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 REFERENCES
De Bussche v alt. vLex. (n.d.). https://vlex.co.uk/vid/bussche-v-alt-806845265

Dowrick, F. E. (1954). The Relationship of Principal and Agent. The Modern Law Review,

17(1), 24–40. http://www.jstor.org/stable/1090968

LINTROSE NOMINEES PTY LTD and Others v KING. VR | Judgment. (n.d.).

https://victorianreports.com.au/judgment/view/1995-1-VR-574

Oxbridge Law Team. (2024, January 7). Boardman v Phipps [1967] 2 AC 46 - case summary.

Oxbridge Notes. https://www.oxbridgenotes.co.uk/law_cases/boardman-v-phipps

Shallcross v Oldham. vLex. (n.d.). https://vlex.co.uk/vid/shallcross-v-oldham-804105837

Shapiro, S. P. (2005). Agency theory. Annual Review of Sociology, 31(1), 263–284.

https://doi.org/10.1146/annurev.soc.31.041304.122159

Turner, C., Trone, J., & Gamble, R. (2021). Concise Australian Commercial Law (6th

ed.).Thomson Reuters

Turpin v Bilton. vLex. (n.d.). https://vlex.co.uk/vid/turpin-v-bilton-802692549

Whitton, L. S. (2013). Understanding Duties and Conflicts of Interest--A Guide for the

Honorable Agent.