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precise nature of the obligation undertaken, and the fact that the obligation is
undertaken gratuitously may inferentially define the extent of the duty. The facts
in this case are a matter of frequent occurrence in practice. A trustee of an
insolvent estate had, at the request of a creditor, undertaken to prove the
creditor's claim in the estate, provided that there was 'no danger of a
contribution'. He was to receive no remuneration for this service. The trustee
proved the claim, but a contribution was eventually levied. The creditor
thereupon sued the trustee in contract for the amount of the contribution,
alleging negligence on the part of the trustee in deciding to prove the claim. It
was held that, in the circumstances, the extent of the trustee's obligation was
merely to apply his mind to the question of whether or not there was a danger of
a contribution, and that in this regard he was obliged to take into consideration
only the information immediately available to him as a trustee. He was not
expected to seek and obtain other relevant information. The Appellate Division
upheld the decision of the court of first instance, deciding that, on the facts of
the case, it had not been established that the trustee had not properly performed
this obligation. The decision went off purely on the facts, and the Court did not
find it necessary to pronounce upon the question, raised in argument, of the
precise degree of care required from an agent in the performance of his
mandate.
Where one sustains stains any such fiduciary obligation to another, that such other is fairly entitled
to his advice and services either for the joint benefit of the two or the exclusive benefit of himself;
and when the party sustaining such relation, in violation of his obligations and duty, enters into
any subsidiary contract with a view to his own advantage, all profits thus resulting belong to the
party for whose benefit he ought to have acted.
The plaintiff --- a company formed with the object of erecting and exploiting cold storage
chambers and plant, and of doing all such business as could be carried on in connection therewith,
and having the power to enter into any arrangement for working jointly or otherwise with any
person or company in any business which seemed fit to be undertaken by it --- appointed the
defendant to act as its manager and representative at Durban, to take charge of its property there,
and to protect its interests, at a remuneration of 600 per annum and a percentage on portion of
the profits. At this time the I Company, who held the contract for supplying frozen meat to the
military authorities, had entered into an agreement with the plaintiff whereby the latter undertook
for certain remuneration to store and re-chill so much of the I Company's meat as would occupy
from time to time one-half of the plaintiffs maximum storage room at Durban, to receive the meat
at its own siding, and to handle it in and out of its stores. While acting as the plaintiff's manager
the defendant in his private capacity, without the permission, consent, or knowledge of the
plaintiff, arranged with the I Company to receive at Durban the whole of the meat landed by that
company there, including that to be stored in the plaintiff's cold chambers as above --- mentioned,
and to supervise its due conveyance into the buildings or into trucks for transport up country; for
these services the defendant received from the I Company d. per lb. on the amount thus
handled. In carrying out this contract for his own advantage he utilised the plaintiff's staff, but he
made the latter an allowance for the extra work thus involved. The plaintiff company brought an
action to compel him to account for and pay over to it the profits which he had made under the
said contract with the I Company. Held: (1) That under the above circumstances the position of
the defendant was a fiduciary one, namely, that of an agent and general manager who was
entrusted with the protection of his principal's interests and the care of its business, and who,
though not bound to devote all his time to its service, was obliged in law to observe the utmost
good faith towards his employer; (2) that the defendant's contract with the I Company being one
within the scope of his employer's business, intimately connected therewith, and obtained by him
by reason of the fact that he was at the time its general manager, the profit earned by the
defendant under that contract was made in the course and by means of his agency; and,
therefore, that the said contract was one which he ought to have secured for his principal, and the
profits resulting from which he was bound to pay over to it.
the conclusion of the sale) which he is endeavouring to bring about between the
offer or and the principal.
While promises of the first class, namely, to pay remuneration merely on the
introduction of an offer are not impossible, the general balance of probability is
against an arrangement of this character; and such a construction of the contract
would require clear and unequivocal language. Normally the principal has in
contemplation an actual sale as the event upon which his promise to pay
commission must be fulfilled and the agent realizes this.
Appellant owned certain fixed property occupied by a lessee in terms of a lease
which provided that appellant might terminate the lease on three weeks notice
in the event of her selling the property. In addition appellant had undertaken, in
the event of her receiving an offer for the property, to give the lessee an option
to purchase the property at the same figure offered by the prospective
purchaser. During the currency of the lease respondent, an estate agent, in
pursuance of a mandate obtained from appellant, introduced a prospective
purchaser who was willing and able to buy on terms approved by appellant. It
was conceded by appellant that, should the lessee exercise his option to
purchase the property, respondent would receive his commission. After the
prospective purchaser's offer had been received, but before it had been accepted
a war measure was promulgated entitling the lessee to refuse to surrender
occupation despite the terms of the lease. The lessee, relying on this war
measure, declined to vacate, and in consequence of her inability to undertake to
give occupation of the premises to the prospective purchaser, appellant refrained
from accepting the offer. A magistrate having found that respondent was entitled
to commission,
Held, on appeal, that, on the facts, respondent had not shown that the event
upon which commission would be payable was anything less than the conclusion
of a binding contract of sale between appellant and the person introduced by
respondent, and that respondent had consequently not earned his commission.
Held, further, that there was in law no implied condition of the mandate that
appellant, as principal should not, by declining to sell to the person introduced,
deprive respondent as agent, of the opportunity of earning commission.
Held, further, that even if the mandates were construed as entitling respondent
to commission "if he shall procure or find a purchaser", it was the conclusion of a
contract of sale that was contemplated as the event upon which the promise to
pay commission had to be fulfilled.
Held, thatthe interest received by respondent being the result of the employment
in England of respondent's own capital in its own business was not received from
any source within the Union, and was therefore not taxable as income under sec.
4 of Act 28 of 1914.
The decision of the Cape Provincial Division in William Dunn & Co., Ltd. v
Commissioner of Taxes, confirmed.
Principal incurs liability, costs, obligations NOT the agent. Direct link est and principal must
therefore indemnify the agent
expressed either with full knowledge of all the material circumstances or with the object of
confirming the agent's acts in all events.
Where a plaintiff founded an allegation of express ratification by the defendant on the terms of a
letter addressed by the defendant to an outsider, and not to the agent or the plaintiff, nor intended
to be communicated to them, Held, that the letter, being res inter alios acta, did not establish a
ratification.
Where an agent has without authority borrowed money on behalf of a principal, and the money
has been expended for the use and benefit of the principal, the latter is liable to repay it unless he
refuses to accept the benefit or takes steps to restore matters to their former position.