Question

Hello everyone
I would like to share with you a situation that occurred many years ago. My wife and I go to Toronto to conduct business about two times per month. My brother-in-law, Marisa's brother, together with his two cousins, own a successful gourmet pasta factory. They make specialty pasta for the better restaurants in the GTA (Greater Toronto Area). I asked him (in the presence of my wife) if he sold to any restaurants west of Toronto. He answered, "No". I also asked him if his products were represented by any distributor west of Toronto. Again he answered, "No". Being the business man that I am, I identified an opportunity. I made him a proposition to sell his products west of Toronto being that it was on my way home to Sarnia. He agreed and for two months I was going back and forth picking up pasta and opening new accounts. However, I discovered that the restaurants I was selling to were not ordering on a regular basis. I couldn't figure out why until one restaurateur told me. She told me that the reason why she ordered from me was because on occasion she was late in placing her order with her distributor that represented the same company I did.
In light of this scenario, could you answer the following questions:
How do you think I reacted to this? (keeping family out of it)

Answer 1

In this case, your are the agent and Marisa’s brother is the principal through the agency relationship created to sell the pasta in the west of Toronto. There are certain duties principal should ensure towards the agent and one of them is cooperation. The principal have the responsibility to cooperate with the agent and assist the agent in performing the duties. The principal must not do anything that will prevent the agent from performing. Once an exclusive territory is offered to an agent, the principal is creating an exclusive agency and the principal should not compete with the agent in that area or allow another agent to compete. If the principal does so, he/she will be liable for the agent’s lost profit and losses. Here Maria’s brother has violated the exclusive agency by appointing you in a territory which is already allocated to another agent. The principal hidden the fact from you and you were trying to sell the product to the restaurants which were already buying from your principal. Hence Marisa’s brother would be liable for your lost sales and profit and hence you can react by suing him for damages.