Agency

Area of Law

This case relates to agency matter.

Outline of Law

A stock broker can be classified as general agents who deal with buying or selling shares in the stock exchange as the representative for the clients (Maltas 2007, p. 22). As an agent, he/she has duties such as to act in good faith which means that he/she has to disclose all of the personal interests and not take a secret profit relating in any agency deals because he/she is in a fiduciary relationship with the principal (Maltas 2007, p. 37). We can see in Armstrong v Jackson (1971) 2 K.B. 82, the principal asked a share broker to buy shares for him. In this situation, the share broker had some shares but he could not sell his shares since he is contacted as an agent for the principal, if he was willing to sell his shares, he would fail to do his liability as an agent. Also, in Hewson v Sydney Stock Exchange (1967) W.N. (NSW) 422, not only could the stock broker indulge in the business of a share trader but also could act as an agent for clients. There is a fundamental principle to give a permission for stock broker to enter the market and to trade not for clients but in competition with them, so that it would be compromised. If the agent has any personal interest in this matter, he/she should decline as an agent.

Apply the Law to The facts

In this case, it is similar to Armstrong’s case as explained above. As an agent, Fred is bound by contract with the principal and he should reveal of any personal interest to his principal and not make use of his position to make any personal benefits for himself without the knowledge of his principal. However, because of his position, it is likely that he could not sell his shares to Brian as his client. If he is willing to sell his shares, he would breach his contract as an agent because