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Agency Topic 3 Cases

Turkstra v Kaplan 1953


The agent may not, in circumstances where there is personal confidence reposed
and special skills required, without consent of his principal, deligate his mandate
to another sub-agent.
The court held that the appointment by an agent of a sub-agent does not in itself
create a contractual relationship between the sub-agent and the principal
In Turkstra v. Kaplan, 1953 (2) S.A. 300 (T), the applicant had obtained an order
against a broker, B, to furnish him with particulars of shares bought and sold on
his behalf. B was unable to comply, since other brokers who had carried out his
instructions were in possession of these particulars and had refused to furnish
them. The applicant now applied for a similar order against the respondent, who
was one of such brokers. Steyn, J., came to the conclusion on the facts that there
was no privity of contract between the applicant and the respondent, and that
there was accordingly no obligation on the respondent, B's sub-agent, to account
to the applicant. In an exhaustive judgment, embracing the old authorities and
decided cases, the circumstances which give rise to such privity are carefully
considered. The learned Judge considered that the dicta of Lord de Villiers, C.J., in
Gertenbach and ANNUAL SURVEY OF S.A. LAW Bellew v. Mosenthal, 1876 Buch.
88, and Kennedy v. Loynes (1909), 26 S.C. 271 at 279, as well as the views of
Story on Agency, para. 201, were contrary to the views of the Roman-Dutch
writers. He was not prepared to accept that such privity could come about
merely in the ordinary course of business, where it becomes necessary to
employ a sub-agent, or where express or implied authority to appoint a subagent is allowed or given by the principal. The law demands an additional
element. The correct view is set out (at 304) as follows:
'Nou kan wel aangeneem word dat 'n lasgewer wat weet dat die uitvoering van
sy opdrag die aanstelling van 'n tweede gelastigde vereis, of dat dit
handelsgebruik is om een aan te stel, stilswyend toestem dat die eerste
gelastigde 'n tweede mag aanstel, maar daar volg nog nie dat hy toegestem het
tot 'n aanstelling waardeur hy die lasgewer van die tweede gelastigde word nie.
Sy bedoeling, afhangende van die omstandighede, kan net so we] wees dat die
aanstelling so moet geskied dat die tweede lasnemer slegs die gelastigde van
die eerste is. Sy toestemming is nie vir net 'n enkele betekenis vatbaar nie. En al
sou hy ook 'n kontraktuele verhouding tussen homself en die tweede lasnemer
beoog, dan moet nog blyk, uit die kontrak tussen sy gemagtigde en die tweede
lasnemer, dat laasgenoemde hom teenoor die eerste lasgewer verbind, en nie
net teenoor sy gemagtigde nie. Eers as dit wel blyk, sou daar die nodige
regsverhouding ("privity") tussen die prinsipaal en die subagent wees.
Blooms Woollens v Taylor 1962
(A.D.), the Appellate Division stressed that, in our law, a person who has
undertaken an obligation is bound duly to perform it, whether or not he is to
receive a remuneration. Thus, an agent, even if acting gratuitously, is liable for
loss sustained by the principal by reason of the agent's failure properly to
perform the mandate. In each case, however, it is necessary to determine the

precise nature of the obligation undertaken, and the fact that the obligation is
undertaken gratuitously may inferentially define the extent of the duty. The facts
in this case are a matter of frequent occurrence in practice. A trustee of an
insolvent estate had, at the request of a creditor, undertaken to prove the
creditor's claim in the estate, provided that there was 'no danger of a
contribution'. He was to receive no remuneration for this service. The trustee
proved the claim, but a contribution was eventually levied. The creditor
thereupon sued the trustee in contract for the amount of the contribution,
alleging negligence on the part of the trustee in deciding to prove the claim. It
was held that, in the circumstances, the extent of the trustee's obligation was
merely to apply his mind to the question of whether or not there was a danger of
a contribution, and that in this regard he was obliged to take into consideration
only the information immediately available to him as a trustee. He was not
expected to seek and obtain other relevant information. The Appellate Division
upheld the decision of the court of first instance, deciding that, on the facts of
the case, it had not been established that the trustee had not properly performed
this obligation. The decision went off purely on the facts, and the Court did not
find it necessary to pronounce upon the question, raised in argument, of the
precise degree of care required from an agent in the performance of his
mandate.

Ese Financial Services v Cramer 1973


In Ese Financial Services (Pty) Ltd v Cramer 1973 (2) SA 805 (C) the plaintiff
claiming commission conceded that the agreement whereby he had undertaken
to 'manage' the share portfolio of another was subject to an implied term that he
would at all times exercise skill and judgment. Here, it would seem, implied
should 9U ANNUAL SURVEY OF SA LAW mean implied by law, because the
common law requires such contracts to be performed without negligence and
regards the absence of the necessary skill as negligence. Failure to exercise the
necessary care did not, however, bar a claim for a percentage of the capital
appreciation of the share portfolio because payment of this sum was not,
according to the contract, dependent upon the agent's carrying out his contract
faithfully. The court did, however, remark that, except in cases of bad faith or
misconduct (which was not present here), ordinary principles apply to a claim for
commission, and the agent is barred from claiming only in circumstances where
an ordinary contracting party would be similarly barred.

Transvaal Cold Storage v Palmer 1904


Whenever an agent in the course or by means of the agency acquires any profit or benefit without
the consent of the principal, such profit or benefit is deemed to be received for the principal's use,
and the amount must be accounted for and paid over to the principal. In order to render the agent
liable to account for such profit it is not essential that it should arise from transactions falling
within the scope of the principal's business; for the agent's liability is based not on the fact that he
has prevented the principal from earning the profits, but on his duty in good faith to hand over to
his employer every advantage directly or indirectly connected with the agency, save the
remuneration agreed upon.

Where one sustains stains any such fiduciary obligation to another, that such other is fairly entitled
to his advice and services either for the joint benefit of the two or the exclusive benefit of himself;
and when the party sustaining such relation, in violation of his obligations and duty, enters into
any subsidiary contract with a view to his own advantage, all profits thus resulting belong to the
party for whose benefit he ought to have acted.
The plaintiff --- a company formed with the object of erecting and exploiting cold storage
chambers and plant, and of doing all such business as could be carried on in connection therewith,
and having the power to enter into any arrangement for working jointly or otherwise with any
person or company in any business which seemed fit to be undertaken by it --- appointed the
defendant to act as its manager and representative at Durban, to take charge of its property there,
and to protect its interests, at a remuneration of 600 per annum and a percentage on portion of
the profits. At this time the I Company, who held the contract for supplying frozen meat to the
military authorities, had entered into an agreement with the plaintiff whereby the latter undertook
for certain remuneration to store and re-chill so much of the I Company's meat as would occupy
from time to time one-half of the plaintiffs maximum storage room at Durban, to receive the meat
at its own siding, and to handle it in and out of its stores. While acting as the plaintiff's manager
the defendant in his private capacity, without the permission, consent, or knowledge of the
plaintiff, arranged with the I Company to receive at Durban the whole of the meat landed by that
company there, including that to be stored in the plaintiff's cold chambers as above --- mentioned,
and to supervise its due conveyance into the buildings or into trucks for transport up country; for
these services the defendant received from the I Company d. per lb. on the amount thus
handled. In carrying out this contract for his own advantage he utilised the plaintiff's staff, but he
made the latter an allowance for the extra work thus involved. The plaintiff company brought an
action to compel him to account for and pay over to it the profits which he had made under the
said contract with the I Company. Held: (1) That under the above circumstances the position of
the defendant was a fiduciary one, namely, that of an agent and general manager who was
entrusted with the protection of his principal's interests and the care of its business, and who,
though not bound to devote all his time to its service, was obliged in law to observe the utmost
good faith towards his employer; (2) that the defendant's contract with the I Company being one
within the scope of his employer's business, intimately connected therewith, and obtained by him
by reason of the fact that he was at the time its general manager, the profit earned by the
defendant under that contract was made in the course and by means of his agency; and,
therefore, that the said contract was one which he ought to have secured for his principal, and the
profits resulting from which he was bound to pay over to it.

Hansa v Dinbro Trust 1949


In the case of Hansa v. Dinbro Trust (Pty.) Ltd., 1949 (2) S.A.L.R. 513 (T.P.D.), it
was held that a person who appoints a broker as his agent to buy shares is
entitled to a proper statement of account and that broker's notes are not
sufficient. A broker's note, it was stated, was not an account of the transaction.

Barnabas v Plein 1928


Applicant, an estate agent, had, on the instructions of respondents, found a
purchaser for their business and stock in trade. A discussion took place between
applicant and J., a member of respondent firm, as to the amount of commission
to be charged by applicant. At that time B, the purchaser, was not prepared to
pay the price which was eventually obtained from him, and applicant was asked
to charge a small commission in view of the price then contemplated. Applicant
told J that his ordinary commission on the figures mentioned would be
approximately 700, but he agreed to charge less in view of the circumstances. J
offered 100, and applicant eventually agreed to accept 250. On subsequent

negotiations between B and respondents, unknown to applicant, the purchase


price of the business and stock in trade was increased. When applicant heard of
this increase, be contended that the basis of the agreement as to commission
had fallen away, and demanded his full commission based on a tariff framed by
the Real Estate Agents Institute, of which applicant was a member. That Institute
had a limited membership and a very large number of its members in a great
number of cases departed from their own tariff, and there were a number of
estate agents who were not members of the Institute. The respondent tendered
40 as additional commission calculated on the same basis as the commission
originally agreed upon. Applicant, in an action for increased commission in a
magistrate's court, contended that he was entitled to the full amount of
commission under the tariff on the whole of the purchase price, and alternatively
claimed the balance of commission on the amount by which the purchase price
had been increased at the rate laid down in the tariff. The magistrate gave
judgement for the defendant, this decision was upheld on appeal to the
Transvaal Provincial Division. In an application for leave to appeal.
Held, that on the assumption that the agreement as to commission was not
applicable to the sale actually concluded, the fact that the agreement was made
preceding it and the reasons for making it were all pertinent to the enquiry as to
whether or not an implied term to pay commission in accordance with trade
usage was to be imported into the contract of employment and that under the
circumstances an agreement to pay the tariff rate of commission could not he
implied.
Held, further, that applicant was entitled to reasonable remuneration for his
services; that, though the existence of a tariff rate could be invoked as evidence
in deciding what is a reasonable remuneration, the evidence as to the tariff was
not strong enough to justify its being invoked in the present case; that, as the
only guide as to what would be a reasonable reward for applicant's services was
the agreement, there was no sound reason for saying that the court below had
erred in fixing the amount of the commission at 290, and that the application
should accordingly be refused.

Gluckman v Landbou 1944

The contract created when a property is placed in the hands of an agent on


commission terms by an owner desirous of disposing thereof is, in the absence of
specific provisions, not a contract of employment in the ordinary meaning of the
term; and consists merely of promises binding on the principal to pay a sum of
money upon the happening of a specified event which involves the rendering of
some service by the agent. The agent's right to commission depends, in the first
instance, therefore, upon the ascertainment of this specified event.
There are two particular classes into which promises of this kind may fall. The
first is where the commission is promised if the agent succeeds in introducing to
the principal a person who makes an adequate offer. The second is where the
agent is promised his commission only upon completion of the transaction (i.e.

the conclusion of the sale) which he is endeavouring to bring about between the
offer or and the principal.
While promises of the first class, namely, to pay remuneration merely on the
introduction of an offer are not impossible, the general balance of probability is
against an arrangement of this character; and such a construction of the contract
would require clear and unequivocal language. Normally the principal has in
contemplation an actual sale as the event upon which his promise to pay
commission must be fulfilled and the agent realizes this.
Appellant owned certain fixed property occupied by a lessee in terms of a lease
which provided that appellant might terminate the lease on three weeks notice
in the event of her selling the property. In addition appellant had undertaken, in
the event of her receiving an offer for the property, to give the lessee an option
to purchase the property at the same figure offered by the prospective
purchaser. During the currency of the lease respondent, an estate agent, in
pursuance of a mandate obtained from appellant, introduced a prospective
purchaser who was willing and able to buy on terms approved by appellant. It
was conceded by appellant that, should the lessee exercise his option to
purchase the property, respondent would receive his commission. After the
prospective purchaser's offer had been received, but before it had been accepted
a war measure was promulgated entitling the lessee to refuse to surrender
occupation despite the terms of the lease. The lessee, relying on this war
measure, declined to vacate, and in consequence of her inability to undertake to
give occupation of the premises to the prospective purchaser, appellant refrained
from accepting the offer. A magistrate having found that respondent was entitled
to commission,
Held, on appeal, that, on the facts, respondent had not shown that the event
upon which commission would be payable was anything less than the conclusion
of a binding contract of sale between appellant and the person introduced by
respondent, and that respondent had consequently not earned his commission.
Held, further, that there was in law no implied condition of the mandate that
appellant, as principal should not, by declining to sell to the person introduced,
deprive respondent as agent, of the opportunity of earning commission.
Held, further, that even if the mandates were construed as entitling respondent
to commission "if he shall procure or find a purchaser", it was the conclusion of a
contract of sale that was contemplated as the event upon which the promise to
pay commission had to be fulfilled.

Commissioner of Taxes v William Dunn 1918

Respondent, a company registered and carrying on business in England under


partnership agreements made with certain South African firms purchased in its
own name goods requisitioned by the firms and then invoiced and shipped the
goods, debiting the firms concerned with costs, freight, charges and commission,
together with interest at 5 per cent. on the balances due from time to time.

Held, thatthe interest received by respondent being the result of the employment
in England of respondent's own capital in its own business was not received from
any source within the Union, and was therefore not taxable as income under sec.
4 of Act 28 of 1914.
The decision of the Cape Provincial Division in William Dunn & Co., Ltd. v
Commissioner of Taxes, confirmed.

Blumenthal v Bond 1916

Principal incurs liability, costs, obligations NOT the agent. Direct link est and principal must
therefore indemnify the agent

Defendant instructed plaintiff, who was a broker and a member of the


Johannesburg Stock Exchange, to buy certain shares. Plaintiff bought the shares
from W, another member of the Exchange, and defendant accepted from plaintiff
a broker's note, which purported to have been issued subject to the rules of the
Exchange. The shares were not delivered within the stipulated time, and
defendant, before delivery was tendered, repudiated the transaction. Thereafter
W called upon plaintiff to take up and pay for the shares, and, in accordance with
the rules of the Exchange, the matter was referred to a committee for decision.
The committee gave its decision against plaintiff in favour of W. In an action by
plaintiff, who tendered delivery of the shares, to recover from defendant the
amount which in terms of the decision of the committee he had become liable to
pay to W, Held, that as the rules of the Exchange under which the matter was
referred to and decided by the committee were reasonable, and the decision had
been given bona fide, plaintiff was bound to pay W for the shares, and that he
was entitled now to be indemnified by defendant.
The decision of the Witwatersrand Local Division in Bond v
Blumenthal confirmed.

Marais v Perks 1963


In what circumstances does an agent who acts for an unnamed (as distinguished
from an undisclosed) principal undertake personal liability on the contract?
Counsel argued in Marais v. Perks, 1963 (4) S.A. 802 (E) at 803, that 'there is a
presumption that the agent is personally liable. By acting for an unnamed
principal the agent assumed personal liability.' Jennett J.P. held (at 807) : 'In my
view there is no ground for saying more than that if an agent contracts as agent
for an unnamed principal there may be a presumption that he is undertaking
personal liability. 'If that is so then the presumption can obviously be rebutted by
proof that the agent acted as agent only. 'In the present case such a rebuttal
appears from plaintiffs' own declaration where . . . it is alleged that defendant
"acted for and on behalf of an unnamed principal". Those words clearly indicate

that defendant contracted expressly as agent.' As a general proposition,


counsel's submission (above) is quite unacceptable: if an agent contracts for an
unnamed principal or any other sort whose existence is disclosed, his intention is
prima facie to render that principal liable and not himself (cf. Ellison Kahn in
(1956) 73 S.A.L.J. 10). From this it should follow that there is not a presumption
that the agent is personally liable. If anything there is a presumption, or at least
a prima facie inference, that the agent is not personally liable, and it is up to the
third party to rebut this presumption by showing that the agent nevertheless
intended to render himself personally liable. Cf. Ellison Kahn, op. cit., 11; M. A.
Millner in Hahlo and Kahn, South Africa: the Development of its Laws and
Constitution (1960), p. 697; Powell, op. cit., p. 217. Contrast Edelson v. Glenfields
Estates (Pty.) Ltd., 1955 (2) S.A. 527 (E), and de Villiers and Macintosh, op. cit.,
pp. 279, 299 (speaking of a ' weak presumption' that A is personally liable) both
of which, with respect, do not correctly reflect the law. Contrast also the
American law relating to the 'partially disclosed [i.e. unnamed] principal':
American Restatement of the Law of Agency 2d, 321. After all, where T
contracts with an unnamed P via A, in the absence of special circumstances P is
the person on whom T has set his sights and on whose credit capacity and other
qualities he has relied. He has taken the risk that these may not turn out to his
liking by not insisting on being told P's identity. There is no reason, as there is in
the case of the undisclosed principal where A is to all outward appearances a
principal contractant on whose identity T relies, for giving T an election between
P and A. The action was one for damages for breach of contract against an
auctioneer who, acting for an unnamed principal, had sold the plaintiff two drums
which were supposed to contain tick oil. One of the drums contained sheep dip
and as a result of using this on his cattle in a manner prescribed for the use of
tick oil, the plaintiff lost 81 head of cattle. The plaintiff's action clearly should
have been brought against the principal, disclosure of whose identity he could
have obtained for the purposes of the action (de Villiers & Macintosh, op. cit., p.
280).
Steenkamp v Provincial Tender Board 2006
As liquidator of a company (the company) which had submitted to the
respondent a tender for a contract, the appellant sued the respondent for
damages as a result of the latters having negligently awarded the company the
tender contrary to the principles of administrative justice. The company incurred
significant expenses in attempting to comply with its contractual obligations, but
the tender award was subsequently set aside on review. The appellant sought to
recover the relevant damages.
After it was awarded the contract for which it had tendered, the company had
incurred expenditure in attempting to comply with its contractual obligations to
the respondent. However, the awarding of the tender was subsequently set aside
on review in an application brought by an unsuccessful tenderer. The appellant
sought to recover the expenses incurred, as damages. The claim was dismissed
by the court a quo on the basis that wrongfulness had not been established.
Held The damages in question were purely economic and consisted of out-ofpocket expenses.
According to the appellant, the respondent owed the company a duty in law to
exercise its powers and perform its functions fairly, impartially and

independently; take reasonable care in the evaluation and investigation of


tenders; properly evaluate the tenders within the parameters imposed by tender
requirements; and ensure that the award of the tender was reasonable in the
circumstances.
The public tender process is regulated by the Constitution, which includes the
right to fair administrative action. The Court highlighted the distinction between
the evaluation of tenders, which falls under administrative law, and the
relationship between the parties once the tender is awarded, which falls under
the law of contract.
Turning to the delictual claim of the appellant, the Court cautioned against the
indiscriminate use of the term duty of care and explained the role of
foreseeability in the determination of wrongfulness. While it might be a factor in
such a determination, foreseeability is not on its own decisive of the issue.
The first factor considered on appeal was the legal duty of the tender board. It
was pointed out that not all breaches of a legal duty result in a duty to
compensate by means of the payment of damages.
Our law is reluctant to extend the boundaries of delictual liability, and this is
particularly the case with regard to liability for pure economic loss. Upon a
careful consideration of the relevant factors, the Court concluded that
the Provincial Tender Board Act (Eastern Cape) did not imply the existence of an
action by tenderers.
The appeal was dismissed.

Blower v Van Noorden 1909


An agent who exceeds his authority in contracting for a named principal, and
whose contract is repudiated by the latter, is liable in damages to the other
contracting party on the ground that from his representation of authority a
personal undertaking on his part is to be implied that his principal will be bound,
and that, if not bound, the other party will be placed in as good a position as if he
were.
Where the facts as to agency are within the knowledge of the ostensible agent,
but not of the other contracting party, the fact that the former signs the contract
"as agent" amounts to a representation that he has authority to contract. But
where the other party knew that no authority to contract originally existed, and a
document obtained at the instance of both to supply that authority was jointly
interpreted and was read by both as authorising the ostensible agent to contract,
and where although both were mistaken, yet both had exactly the same
knowledge of the facts, Held, that a representation of agency could not be
implied from the fact that the ostensible agent signed the contract "as agent."

Reid v Warner 1907


To establish a valid ratification of an agent's acts it is necessary to prove an intention by the
principal to confirm and adopt the unauthorised acts done on his behalf, and that intent must be

expressed either with full knowledge of all the material circumstances or with the object of
confirming the agent's acts in all events.
Where a plaintiff founded an allegation of express ratification by the defendant on the terms of a
letter addressed by the defendant to an outsider, and not to the agent or the plaintiff, nor intended
to be communicated to them, Held, that the letter, being res inter alios acta, did not establish a
ratification.
Where an agent has without authority borrowed money on behalf of a principal, and the money
has been expended for the use and benefit of the principal, the latter is liable to repay it unless he
refuses to accept the benefit or takes steps to restore matters to their former position.

Weedon v Bawa 1959


In Weedon v. Bawa, 1959 (4) S.A. 735 (N), the plaintiff A sought to recover
money which she had been induced to pay to the defendant B as the result of
the fraud of C. A was a widow, B was an attorney and C was employed by B as a
clerk and typist. A had 13,000 available for investment, and C informed A that B
would be prepared to borrow the money at an attractive rate of interest. A had
not met B but agreed with C to lend the money to B and handed C a cheque for
3,000 in favour of B. C gave A a forged receipt on a form taken out of the back of
B's receipt book purporting to have been signed by B. C then took the cheque to
B, representing to him that it was a loan to her (C) from a friend and that she had
had the cheque made in B's favour because her own banking account was
overdrawn. B was thus persuaded to pay the cheque into his own private
banking account, and he paid the proceeds to C. Caney J. found that C had no
actual authority to accept the money from A on behalf of B, nor had she implied
authority to negotiate investments or accept money on loan on behalf of B
(whose business included no investment work of this kind). Nor had B held out C
as having such authority. On the contrary, A had 'failed to observe ordinary
business precautions in entering upon what purported to be a loan, without
security, to a person unknown to her save by name, at the instance of a woman
who was his typist-clerk' (at 741). It was also contended on behalf of A that the
money was recoverable from B by way of condictio indebiti; but the learned
Judge rejected this contention because B had not been enriched by the
transaction (cf. King v. Cohen, Benjamin & Co., 1953 (4) S.A. 641 (W)).

Relations between Agent and Third Party

Howards Debt Collecting Agency v Haarhoff 1925


Where a person in making a contract discloses both the existence and the name of the principal on
whose behalf he purports to make it, he is not, as a general rule, liable on the contract to the
other contracting party, but a personal liability may be imposed upon him by the express terms of
the contract, by the ordinary course of business, or by usage.

Blower V Noorden 1909