Corporation Law: Rights and Remedies of Rugger Advance Pty Ltd against Sales Agent

Running head: CORPORATION LAW
CORPORATION LAW
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1CORPORATION LAW
Question 1:
Issue:
The issue of this case study is whether there are any rights or remedies available to
Rugger Advance Pty Ltd (‘RA’) against its sales agent Mr. Rick Nixx (‘RN’).
Rules/Law:
An agency is formed by delegating of liability and duty from one party to another such
that the latter party acts and performs on behalf of the former party (McNay, 2015). In such case,
the former party who delegates the responsibility and duty is known as the principal and the
latter party to whom such responsibility is delegated is known as the agent of such principal. The
principal is liable to all the acts of the agent performed by him during the continuation of agency
as seen in the case of Panorama Developments (Guildford) v Fidelis Furnishing Fabrics
Ltd[1971] 2 QB 711.
The relationship of a principal and agent is generally created in a contract that transfers or
delegates the agent the authority of acting on behalf of the principal for which the agent is
entitled to get some remedy for performing the work assigned to him. Since, the agency is
usually created out of a contract; both the parties are bound to follow the duties under a contract.
Moreover, since the agent is acting on behalf of his principal, there lies a fiduciary duty of the
agent towards his principal. Fiduciary duty means a duty based on mutual trust, honesty and
fidelity. The agent has to follow certain duties such that the fiduciary relation is not hampered.
The agent must not involve in creating a business in competition with the principal. The agent
must act in such a away such that all the benefit are directed towards the principal. Moreover, he
must perform all duties carefully and diligently. It is seen in the case of Hewson V Sydney Stock

2CORPORATION LAW
Exchange 1967 87 WN NSW 422 where the agent had been made liable by the court for the
conflict of interest while he was acting as an agent.
Moreover, the agents have a duty to perform their responsibilities according to the
directions of the principal. The agent shall perform his part of duties with care and diligence
while working as pr the principal’s instructions. In the leading Mitor Investments Pty Ltd v
General Accident Fire E Life Assurance Corp Ltd [1984] WAR 365 case, the court held that the
agent will be personally liable if he goes beyond the directions or instructions of the principal.
In addition to these, the agent also has the duty to keep the principal informed in case of
any conflict of interest or other advantages or benefits that he may incur while acting as an agent.
The court held that when the agent did not inform the principal about the existence of such
conflict of interest, the principal may terminate the contract on the basis of this ground. This has
been observed in the case of Lintrose Nominees Pty Ltd v King 1995 1 VR 574.
Moreover, the agent has a duty to disclose any personal profit or gain he has incurred or
may incur while acting on behalf of the principal. It was observed in the case of Lunghi v
Sinclair [1966] WAR 172, that if any personal profit or gain is being incurred by the agent while
performing on behalf of the principal, such profit or gain must be returned back to the principal.
Again in the case of Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132
CLR 373, it was held that the agent is prohibited to disclose any confidential information that he
received while being the agent, to the outsider.
The court has also decided that the agent must pay damages for causing any loss to the
principal which is caused by creating a competitive venture to the principal’s venture. In the case
of ACCC v Flight Centre Travel Group Ltd (2016) 339 ALR 242, the court has ordered a penalty