Question

Ram has just sold his share in a company and decided to buy a new car for his wife. On 15 April 2019, Ram appointed Gan as his agent to buy a car at the price not exceeding RM 75,000. The next day, Gan went to see Song, a car dealer and booked a car at the price of RM 85,000 and paid the deposit of RM 8,500. Gan told Song that the car was meant for Ram’s personal use. Song gave Gan RM 500 as a commission for booking the car with him. One month after the booking date, Song sent the car to Ram and claimed for the balance purchase price of the car. Ram told Song that he has never authorized Gan to purchase the car at that price and refused to accept the car. Advise Ram with regards to his rights as a principal. 2. Describe the circumstances under which a principal cannot revoke/ terminate the authority of his agent.

Answer 1

Principal and Agent

1. Rights of the Principal:

a. The principal can enforce the various duties of an agent.

b. The principal can recover compensation for any breach of duty by the agent.

c. The principal can forfeit agent’s remuneration where the agent is guilty of misconduct in the agency business.

d. The principal is entitled to any extra profit that the agent has made out of his agency. This includes the illegal gratification of RM500 that Song paid to Gan.

2. Circumstances under which the principal cannot revoke/terminate the authority of his agent are:

a. The agent has performed his authority partially.

b. When the agency is coupled with a legal interest in the agency and the interest has not been realized by the agent or the interest has not expired.

Step-by-step explanation:

a) Some facts of the case:

Principal = Ram

Agen = Gan

Car dealer = Song

Authority limit for the purchase of the car = RM 75,000

Actual amounted booked for the car by the agent = RM 85,000

Deposit for the car = RM 8,500

Commission received from Song by Gan = RM 500

b) Gan did not actually act in the best interest of his principal, Ram, who gave him limited authority to buy a car at a price not exceeding RM 75,000. It looks like Gan was more interested in the commission (bribe) that he received from Song instead of performing his duties as an agent to Ram. If the agency authority is written down, Ram can use it as evidence that Gan's authority was limited.