Question

Jefferson entered into a contract with Adams whereby Adams would sell goods produced by Jefferson's company. Adams was to be paid a commission for each sale he made, and the agreement was to last from January 1 to June 30.

Adams' work resulted in significant sale for the company. In early June, he was on the verge of closing an extremely large and lucrative contract when Jefferson ,suddenly and without notice, revoked Adams’ authority to sell. Is Adams able to conclude this contract? Please explain.

Answer 1

In this case Adams is a sort of agent for Jefferson as he sells goods being manufactured by Jefferson on a commission basis. Thus the contractual relationship between Jefferson and Adams can be deemed as a principal agent relationship.

Originally the agreement was made for the period January 1 to June 30. However the relationship can be terminated through act of parties, performance by the agent, revocation by the principal, renunciation by the agent, by notice and by operation of law.

In this case Jefferson has terminated the relationship without notice and hence this is a case of unilateral revocation. Usually all contracts contain that a reasonable notice has to be served but in this case no notice has been served. Thus in this case the unilateral revocation will render Adams powerless to conclude the large sales contract but he will be able to sue Jefferson for the breach of the agency agreement. Thus Adams will not be able to conclude the contract but he can sue Jefferson for the breach of the agency agreement.