Question

This is BBM204/05 Business Law subject

1. Thomas directs Benjamin, his agent, to buy a certain house for him. Benjamin tells Thomas it cannot be bought and buys the house at the price of RM1.5 million for himself. Now, Thomas discovers that Benjamin has bought the house. Can Thomas compel Benjamin as his agent to sell the house to him at the price he gave for it? Advise Thomas as the principal. (20 marks)

Answer 1

The issue is whether there is breach in purchase of property by the agent and if the principal has right over such property.

As per the common law/business law, agent is liable to the principal to act in the principal's best interests within his powers as an agent. Hence he must not have any potential conflict in his personal interest with that of the interest of his principal. However there may be a case where the agent may come across conflict of interests. In such a case, he shall disclose such interests to the principal and obtain his consent. Such disclosures shall be true and completely made to the principal. However if agent fails do so, there will be breach in the his fiduciary responsibility and hence, he can be held  liable to pay any for any profits or benefits he derives from such acts as a result of the breach.

Hence, Benjamin had conflict of his personal interest against that of Thomas and ended up serving his own than his principal's. Moreover he did not make any true and correct disclosures about the same with his principal. Thus, Benjamin failed in his fudiciary responsiblilty as an agent. Thu he is liable to return the benefit to the principal he derived due to the breach. This Thomas can compel Benjamin to sell the house to him.