Question

Bob is a buyer and a seller. He makes money buying things and selling them at a profit. He sells items online and at pop up markets. He buys and sells many types of items but his specialty is old furniture.  

Bob hires Mary to be his agent. Mary’s agency duties include traveling around Maryland and buying old furniture for Bob. Mary is somewhat of an expert on the matter of old furniture. Mary has the authority to spend up to $10,000 for furniture she purchases for Bob.  

One day, Mary is at an antique shop. She finds two pieces of furniture that she knows Bob would like, a chair and a side table. The seller wants $3,000 for the chair and $11,000 for the side table. Mary thinks the chair is worth a lot more than $3,000. She thinks it’s worth at least $5,000. She also believes the side table is worth at least $12,000.

Mary buys the chair with her own money for $3,000. She later sells the chair online to a woman in Florida making a profit of $2,000.  

What duties has Mary breached? Explain fully. Also, use only the facts above. Do not assume anything. All the facts are in the question.

Answer 1

Mary as an agent for Bob has breached her contract by selling on her own account and making profit without knowledge of Bob.

Duties of an agent is to act on behalf of his/her Principal and buy or sell within the limits and instructions of the principal

Sole agent is the one who should not sell on his own account

Agent works for commission and it is not proper for an agent to sell on his own account the same goods for which they are entrusted to act upon as an agent .

Duties of an agent

To Act upon the instructions of Principal

Not to make undue profits on own account

Report all transactions made to the principal and payment of all sum received on his/her account

Account for all transactions on his Principal's behalf

In this case Mary has breached the trust by dealing in the same goods without the knowledge of her Principal and making undue profits over and above her commission