Quiz 25: Agency Law
Fiduciary duty of the agent: Fiduciary duty refers to performing the basic duties with relation to a job or a task. For instance, the fiduciary duty of a company in a sale contract is to deliver the right product to the customer for the right price at the right time. Failure to perform the tasks is to be considered as a breach of fiduciary duty. Brief history of the case: The person P, a retired employee wanted to make investment in tax free low risk funds and he contacted the person J, an agent with the investment company H. The person J opened an investment account with the company and invested the person P's funds. The person J kept on cheating the person P by saying that the investments are making good money. Ultimately the person P found that he lost plenty of money because of the fraud and brought action against the investment company H. Outcome: In this case, the company H has to be held liable for the loss suffered by the person P and the actions of the person J. This is because the company was well aware of the person J's actions but did not initiate any action to reprimand him. Neither did the company act in a responsible manner to inform him of the actions of the person J. Thus, the Company failed to deliver the fiduciary duties of the principal.
The Facts of the Case are as follows: • Company IAC made a deal with Company BIC for buying BAWL hotel. • According to the agreement the seller has no actual notice of defect in any of the following: • The structure of the Hotel • Plumbing • Heating • Air-conditioning • Electrical or utility systems • When the team of experts hired by respondents inspected the premises they found no defects in pipes, heating and air-conditioning systems, etc. • At the time of remodeling the structure a number of defects surfaced. • In addition there were evidences which showed that the seller had done previous repair and maintenance work. The Issue concerning the case is as mentioned below: The issue is whether BIC breached the sales agreement and is liable to be charged for an act of fraudulence or not. BIC was sued on the following counts: • Actual fraud • Constructive fraud • Wrongful foreclosure • Breach of contract • Sought the return of expenses and monies due • Constructive trust imposed against appellant Madesco The trial court gave a judgment against BIC and fount it liable on account of Constructive fraud and Breach of contract.
The case is related to the duty of loyalty. The Facts of the Case are as follows: • Company PF gives polishing service of steel to different companies in Detroit area except to company FMC. • Mr. PS, president and board member of company PF, many times approached company FMC to provide them polishing services but did not succeeded. • PS came to know that Ford was thinking to end its polishing work. He suggested that the company should make efforts to obtain polishing work of FMC and try to buy F's equipment to be used for setting up an ancillary plant to handle the work. • Mr. PS spoke discussed the company's proposal with the officials of company FMC but the manager was against this proposal. • Further PS shared his personal proposal with company FMC. The proposal stated PS would purchase FMCs equipment and thereby would give polishing services to the company in future. • PS informed the company PF about that he was carrying the company FMC's business himself at the time of his resignation. The Issue concerning the case is as mentioned below: The issue is whether Mr. PS breached his duties or not. Mr. PS breached his fiduciary duties by diverting a corporate business opportunity for his personal gain. PS did so when he pursued the FMC polishing business to enter into the contract and purchased the FMC equipment without full disclosure to the corporation. The company PF wins the case.