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ACCA Applied Skills · Corporate and Business Law (Global) · Agency law

Ilsa is Brandt Ltd's agent and sells its goods on commission. Her agreement is silent on commission when the principal ends the agency. Ilsa had procured an order that Brandt Ltd then wrongfully refused to fulfil, to avoid paying her commission. Which statement is correct?

Ilsa can claim commission or damages. A principal must not wrongfully prevent an agent from earning remuneration, so refusing to fulfil an order Ilsa procured, simply to avoid paying her, breaches this implied duty.

  1. AIlsa has no claim because commission is earned only when the principal is paid
  2. BIlsa may claim commission only if she holds a lien over the goods
  3. CIlsa may claim damages or commission since the principal must not prevent the agent from earning remunerationCorrect
  4. DIlsa may only claim her expenses, not commission

Explanation

A principal has an implied duty not to prevent the agent from earning commission by wrongful acts, such as refusing to complete a transaction the agent has procured. The agent may claim remuneration or damages. Option A ignores this implied term.

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