Practicle Problems_Contract Act_75

A authorises B to sell a camera for him, and agrees to give B, a commission of 10 per cent of the sale price. A afterwards, by a telegram, revokes B's authority. B, after the telegram is sent, but before he receives it, sells the camera to C for Rs. 10,000. C is also not aware of the revocation of authority by A. A later refuses to deliver the camera to C and pay commission to B for the sale, on the ground that the sale was not binding upon him. Decide:

(i) whether A's contention is valid ?
(ii) whether B is entitled to commission on the sale price ?
(iii) what are the provisions of the Indian Contract Act in this regard ?

(i) A's contention is not valid.
(ii) Yes, @ 10 per cent on Rs. 10,000.
(iii) Revocation of authority of an agent does not, insofar as the agent is concerned, take effect until it becomes known to him and insofar as third parties are concerned until it becomes known to them.

Contract Act_Practicle Problems_74

Mr. Ahuja of Delhi engaged Mr. Singh as his agent to buy a house in West Extension area. Mr. Singh bought a house for Rs. 20 lakhs in the name of a nominee and then purchased it himself for Rs.24 lakhs. He then sold the same house to Mr. Ahuja for Rs 26 lakhs. Mr. Ahuja later comes to know the mischief of Mr. Singh and tries to recover the excess amount paid to Mr. Singh. Is he entitled to recover any amount from Mr. Singh? If so, how much explain.

Agent is not to deal on his own account. If the agent wants to do deal on his own account, he must disclose all the material facts to his principal and obtain his consent. The principal can rescind the contract, if any material facts were dishonestly concealed by the agent or the dealings of the agent on his own account have been disadvantageous to the principal.

Agent can not make any secret profit out of the business of agency. If the agent deals on his own account without disclosing it to the principal, the principal is entitled to claim from the agent any benefit received by him, out of such transaction. Mr. Ahuja engages Mr. Singh as his agent for purchase of a house. Mr. Singh purchases a house in the name of the nominee and then purchases the same house on behalf of Mr. Ahuja (his principal), thus making a profit of Rs. 4 lakhs. However, he does not disclose these facts to Mr. Ahuja. Non-disclosure of profit of Rs.4 lakhs made by Mr. Singh amounts to a beach of duty by Mr. Singh. Therefore, Mr. Ahuja is entitled to claim the secret profit of Rs. 4 lakhs made by Mr. Singh.