Question

Todd Silver is the purchasing agent for Moore Co. One of his suppliers, Gem Co. offers Todd a free vacation to France if he buys at least 75% of Moore's supplies from Gem Co. Todd, who was angry because Moore Co. has not given him a raise in over a year, is considering the offer. Post your recommendation to Todd

Answer 1

What Todd Silver is considering would amount to a conflict of interest, since Todd the agent would place his personal interest before that of his principal, Moore Co, if he should take up the offer made by Gem Co. One of the duties of the agent is to avoid conflict of interest with the principal.

The position in the law of agency is that under the circumstances, Moore Co. is entitled to repudiate the transaction if the dealings of the agent has been disadvantageous to them. In other words, if Todd's dealings have resulted in a loss to Moore Co., Todd might be held to be personally liable for the loss.

Rather, Todd should approach Moore Co. and negotiate for a raise. If things do not work out, he can renounce the agency by giving notice to Moore Co.