As between Principal and of an Agent to Ns Principal. Broadly speaking it is the duty of an agent to do the work he has under taken according to the terms of his authority, and with reasonable skill and diligence. It is difficult, and even impossible, to elaborate a test which may be applied in all cases, and determine whether the necessary reasonable skill and diligence has been exercised. But, as a working principle, it may be laid down that a man who undertakes to act for another must show as much skill and diligence therein as he, being a man competent for such an under taking, would have shown if acting in his own affairs. And further than that, if the agent holds himself out as possessing a specialised and pro fessional skill in certain matters, then when acting in such matters lie must exercise that special skill. It is not sufficient for such an agent merely to do his best—he must exercise his special skill, even though he be doing the work gratuitously. Again, whatever the anent does must be done for the benefit of his principal, although it may not done in the principal's name.
From this it follows that an agent cannot in the course of his agency, and without the permission of his principal, turn hir.self into a principal. If an agent is employed to sell a house for his principal, he may not, without his principal's assent, purchase the house himself. If that same agent is em ployed to purchase a ho8se for his principal, he may not, unless it is done with the full knowledge of the principal, sell to the latter his own house. This rule applies equally in other matters than buying and selling houses; and is binding even in the face of a trade usage, unless the principal is aware of such usage. The reason of the rule is that an agent must not place himself in a position wherein his interests are adverse to his principal's. In the above two cases, so long as the purchase is not completed the principal would be entitled to withdraw from the contracts and refuse to complete; or if completed, and the truth comes to the knowledge of the principal, he Would have an action against the agent to recover any profit the agent may have made.
And it naturally results from the above rule that an amt may not make a profit during the course of, and connected with.the agency, of which his principal is unaware. Such a profit is known as a secret profit, and frequently occurs in the shape of a commission. Such a profit, if made, belongs to the principal, who may recover it from the agent by an action, and it would moreover be such misconduct of the agent as would permit the prin cipal to terminate the agency. Not only would the principal be able to recover the secret profit from the agent, but he would have a right of action in respect thereof against the third party. Illustrations of such cases are numerous in the law reports. Thus, in one case, where a broker was em ployed to purchase a ship ; the vendor employed an agent and agreed to give him whatever was obtained over £8500. The agent agreed to give a part of this excess to the broker, and eventually the ship was sold by the broker for 19250. In this case it was held that the broker's principal could claim whatever the broker had obtained from the agent. Again, in another case, the plaintiff desired to procure certain shares and the defendant had agreed to buy some for him at a certain price ; but as a matter of fact the defendant had already bought some for less than that price, and these he sold to the plaintiff. Here the Lord Chancellor held that the defendant was an agent, and must hand over the difference between the bought and sold price.
Closely allied to the question of secret profits, arises that of an agent receiving commissions from both sides. That this is done every day in
business can hardly be questioned ; still less can its immorali ty be denied. r But as to its illegality ? Until somewhat recently this was an open question, but now the rule appears to be that an agent may make such a double profit, when the second profit is known and approved by the principal ; and also when a distinct usage exists, and at least constructive ledge on the part of the principal can be shown. But it is a dangerous thing for an agent to have such a thing brought out against him in an action ; for so long ago as the time of Lord Ellenborough, that great judge described a usage of double commissions as one " of fraud and plunder." Since then the Prevention of Corruption Act, 1906, has been passed. Because this practice is, as we have already said, so extensive even to-day in the commercial world, notwithstanding the statute just referred to (see CORRUPT COMMISSIONS, in Appendix), the following extract from a judgment of Lord Justice Bowen will be pertinent and useful. his lordship said : " There can be no question that an agent em ployed by a principal or master to do business with another, who, unknown to that principal or master, takes from that other person a profit arising out of the business which he is employed to transact, is doing a wrongful act, incon sistent with his duty towards his master, and theucontinuance of confidence between them. He does the wrongful act whether such profit be given to him in return for services which he actually performs for the third party, or whether it be given to him for his supposed influence, or whether it be given to him on any other ground at all ; if it is profit which arises out of the transaction, it belongs to his master, and the agent or servant has no right to take it, or keep it, or bargain for it, or to receive it without bargaining, . unless the master knows it." The next rule for our consideration is expressed in the legal maxim Delegatus non potent delegare, which means that an agent cannot delegate his authority t4 another. Such is the rule, and the following are the exceptions to it : (a) where the delegation is customary ; (b) where it is necessary to proper performance ; (c) where it is permitted by agreement, express or implied. The rule, when analysed, merely imports that an agent cannot, without authority from his principal, devolve upon another obligation to the principal which he has himself undertaken to personally fulfil. This is so because confidence in the particular person employed is at the root of the contract of agency, and such an authority cannot be implied as an ordinary incident in the contract. But the exigencies of business do from time to time render necessary the carrying out of the instructions of a principal by a person other than the agent originally instructed for the purpose. Where that is the case, the reason of the thing requires that the rule should be relaxed, so as on the one hand to enable the agent to appoint what may be termed a sub-agent, and on the other band to constitute in the interest of, and for the protection of the principal, a direct privity of contract between himself and such substitute. An authority to such effect may, and should be, implied, where from the conduct of the parties to the original contract of agency, the usage of trade, or the nature of the parti cular business which is the subject of the agency, it may reasonably be presumed that the parties to the contract of agency originally intended that such authority should exist, or where in the cturse of employment, unforeseen emergencies arise which impose upon the agent the necessity of employing a substitute.