Question

Please provide answers and discussion on all of the following:

• List three principle duties of the agent to the principal and explain why they are important.
• How can you have a valid enforceable contract and have it become unenforceable? Remember that an oral contract for sale of real estate is not a valid enforceable contract because your text is specific that such a contract appears to be valid but is not in court! That also means your answer won’t include discussion of real estate brokers practicing law, or parties too young, or coerced or incompetent and so on! The contract in this question is perfect because I say it is!

Answer 1

Que: Three principle duties of an agent to the principle:

A)Duty of Care: The agent must exercise due diligence in running the business of principle. He should make sound decisions that are in the long-term interest of business.

B)Duty of Loyalty: The agent should demonstrate unyielding loyalty toward his principle. He should not disclose the secret information to any third party as well as does not make any secret profit from the business of his principle

C)Duty to Render Accounts: The agent should properly maintain the accounts of principle’s business and regularly communicate the same to principle. He should ensure that the information represents the true and fair view of the state of affairs of business.

These duties are essential for the survival and growth of the business of principle. If the agent doesn’t run the business with due diligence and care, make a secret profit or disclose confidential information to the third party and present the falsified accounts to principle, it would result into losses and failure in the long run. Failure of business is neither in the interest of principle nor agent, as the agent will lose employment and the principal his capital.

Que: How can a valid enforceable contract can become unenforceable:

A valid contract enforceable at law can become unenforceable later on due to the impossibility of performance of the contract. For examples:

a) Mr. Z, who is a painter, agree to make a painting of Miss Y. But after few days, Z is paralyzed. Here, the contract becomes void due to the impossibility of performance of the contract.

b) Mr. Z resident of South Korea enters into a contract with Mr. X resident of North Korea to supply 10-tonne wheat after 2 months. Before the completion of the period of two months, war breaks out between South and North Korea. As the result, Government of South Korea declares all trade with North Korea illegal. Here, the contract between Mr. X and Mr. Z become void due to the impossibility of performance of the contract.