Question

X Co. owns land all over downtown Toronto. From time to time, X Co. has used John Jones as its agent to sell land that it owns. X Co. hires John and tells him it wants to sell a downtown property located on Front Street. It instructs John to list the property for $1 million, but that it will take $900 000.00. John has a friend, Mary, who is interested in buying the Front Street property, but rather than listing it at $1 million, he simply tells Mary For $900 000.00 it's yours, and she agrees. John, having effected the sale, now wants to be paid his commission by X Co.

Applying the principles of agency law, discuss the legal issues raised in the above situation.

Answer 1

John Jones, as an agent to X Co., breached his fiduciary duty by not listing the property at the instructed price and instead making a private deal, thus violating principles of agency law.

Step-by-step explanation:

The legal issues raised in the scenario pertain to agency law, particularly the duties of an agent to their principal. In the given situation, X Co. has hired John Jones as an agent to sell its property. By agency law, John owes a fiduciary duty to X Co., which includes duties of loyalty and obedience. By not listing the property at the instructed price of $1 million, and instead selling it directly to Mary for $900,000, John has breached these duties. He acted contrary to his principal's instructions and potentially deprived the principal of receiving a higher offer. Although he succeeded in selling the property at the authorized minimum price, John's failure to follow X Co.'s instructions and his decision to make a private deal with Mary raise significant issues regarding his conduct as an agent.