Question

Smith employed Hamilton as his agent in a business of selling cooking gas. For many years Hamilton sold cooking gas to Havana wholesalers. Arising from a dispute in the work place, smith dismissed Hamilton. Smith did not inform the proprietor of Havana wholesalers about Hamilton’s dismissal. After the dismissal, Hamilton proceeded to Havana wholesalers and collected cash amounting to shs.100, 000 balance of payment due to smith for cooking gas which had delivered earlier. Hamilton, the agent of smith. Discuss the legal principle applicable.​

Answer 1

The legal principle applicable is the agency relationship.

Step-by-step explanation:

An agency relationship exists between Smith and Hamilton where the principal, Smith, delegates authority to the agent, Hamilton, to act on his behalf. The two parties can terminate their agency relationship at any time. However, when the relationship is terminated, as in this case, it behooves Smith to inform his business associates to desist from doing business with the former agent, Hamilton. If Smith had initiated this communication earlier to Havana Wholesalers, the collection of the cash by Hamilton could have been forestalled. On the part of Hamilton, he has no legal rights to collect the cash from Havana after the agency relationship with Smith has been terminated. Therefore, Smith should take legal measures to recover the sum from Hamilton. Smith cannot recover the amount from Havana Wholesalers since it was not informed about the termination of the agency.