Commercial Law

Part A

Agency contracts continue to be observed in Scots commercial law. It is crucial to affirm that agency contracts emanate from contractual agreement between one person called the principal and the other party commonly referred to as the agent. The three common types of agents common in the Scottish law include universal agents, special agents, and general agents. The agent is always supposed to work for the principal and ensure that secret information relating to the principal is not disclosed at any given point in time. The Scottish law also provides a guideline on the termination of agency contracts. For instance, an agency contract may be terminated through the withdrawal by an agent, discharge of the contractual agency obligations, and the operation of the law. Both the agent and principal are supposed to understand these aspects to avoid instances where agencies are terminated without a sufficient cause. 

The Scottish law provides a clear framework for the termination of contracts through the withdrawal by an agent, the discharge of contractual agency obligations, and the operation of the law. 


Duties of Agent

In tandem with the Scottish law, agents have different duties that they have to fulfil on behalf of their principal. The termination of agency contracts is always motivated by their failure to meet these duties or by the principal’s enforcement of other duties outside the contract. One of the key duties is the duty not to disclose confidential information relating to the principal. Disclosure of such information will warrant termination of the contract. More so, an agent has the duty to act with skill and due care. This implies that the agent owes the principal a duty of care and has to work with diligence to avoid any injury to the principal. The agent also performs fiduciary duties for the principal.  According to Busch and Macgregor, agents are supposed to work for the interest of their principal without allowing their personal interests to take over. The principal does not have the right to terminate fixed period contracts because he will be required to compensate the agent in the form of damages. Overall, reasonable notice needs to be given by one party to another before the termination of an agency contract can be effected by the law. 

Terminating the Contract

In line with the Scottish law, an agency contract may be terminated through withdrawal by an agent. It is worth noting that the agent could withdraw from the agency contract through resignation. DeMott reiterates that the agent does not have the right to claim compensation in cases where he withdraws from a fixed period agency. In fact, there needs to be reasonable notice to both the principal and third parties before the step could be undertaken. The agent could withdraw from the agency in cases where he feels that new responsibilities have been given to him without adequate payment or the principal has acted in a manner that limits his position in the agency.  

More so, an agency could be terminated through the discharge of contractual agency obligations. This happens in instances where the principal feels that the contract should come to an end because of the agent’s failure to perform all the agreed duties and responsibilities. It could happen through mutual agreement between the parties to the contract or the dismissal of the agent by the principal. Nevertheless, the principal will be obligated to compensate the agent in cases of a fixed period contract. There should also be reasonable communication to third parties through the required channels to avoid any inconvenience brought about by the termination of the agency. The case Scottish Power Energy Retail Limited vs. Taskforce Contracts Limited was a landmark case that gave the principal the right to cancel an agency contract in cases where the agent fails to act in good fail in the fulfilment of duties and responsibilities in the contract. For instance, judges presiding over this case held that Scottish Power Energy Retail Limited had taken the correct step to cancel the contract because of the agent’s failure to meet the agreed duties and responsibilities.  

The Scottish law also recognises the termination of an agency contract through the operation of the law. The law steps in to terminate the contract in cases where different events occur during the contract. For instance, the law could swing into action and terminate the contract when either parties is incapacitated by death. The Scots law holds that the agency will automatically come to an end in cases where one party dies before the expiry date. This happens because death leads to the loss of an agreement between the parties. There is no way one party will act in the interest of a dead body as an agent. 

Additionally, the law requires the termination of an agency agreement in cases where there is cessation of the principal’s business. The principal could become insolvent leading to the termination of his business. In the case, Patmore & Co. vs Cannon & Co (1892), the agency agreement had to be terminated due to the cessation of the principal’s business. The law takes this action because the agent can no longer provide agency services to a bankrupt principal.

The law also holds that the agency contract could be terminated in cases where either party becomes insane during the contractual agreement. Insanity incapacitates the parties to the agency hence requiring urgent termination of the agreement. Nevertheless, it should be noted that the insanity of either the principal or the agent will not terminate the power of the attorney granted after 1 January 1991. The law should be followed carefully when dealing with insanity. 


In conclusion, both the principal and the agent are supposed to understand the ways of terminating their agreement under the Scottish law. The agent must first understand his/her duties and responsibilities under the contract. For instance, he/she is supposed to act in the interest of the principal at any given time. He could withdraw from the contract in cases of additional and unpaid responsibilities. The principal could also discharge the agent from the obligations of the agency agreement due to non-performance of the agreed duties. Lastly, the law takes the responsibility to terminate an agency because of death, cessation of the principal’s business, and cases of insanity to either party in the agreement. 

Question B

In this case, Fred could rely on the delict law (Scotland) and the law of tenement, which is regulated by the Tenements (Scotland) Act 2004. It is crucial to note that the delict law will provide guidance on any duties owed to him by Duncan, and the subsequent breach of these duties. On the other hand, the law of tenement will help him bolster his claims on the recovery of payments by providing an effective guide on the relationship of individuals living in flats. For instance, the tenements law obliges owners of flats to maintain any part of their property that provides support and shelter to their neighbour’s property. It forbids individuals from doing anything to their property hence limiting the kind of shelter offered to a neighbour. It would be advisable for Fred to understand the provisions of both the delict law and the law of tenements to win this case, and recover the costs he incurred in repairing the door and the broken pipe. 

The case of Donoghue vs. Stevenson (1932) will provide an effective guide to Fred in this case, as he tries to recover the costs incurred in repairing Duncan’s property.

In line with the law of tenements (Scotland), Fred could argue that Duncan failed to repair his property within the right time hence denying his the shelter from the leaking water.  Hough affirms that the tenements law requires the person living in one flat to repair his/her property earlier enough to avoid any harm to his/her neighbour. The failure to take such actions will require him/her to compensate the injured neighbour in the cases where shelter is denied. In this case, it is clear that Duncan left for the Amazon without diagnosing that his water pipe was broken. Therefore, he had failed to repair it before his departure. On the other hand, Fred took the action to break into Duncan’s house in good faith to prevent the leakage from reaching his house.  This action justifies the view that the failure of Duncan to act had led to the loss of his shelter. Therefore, he needs to recover the costs that were incurred in fixing the door as well as the water pipe. He could not have just stayed in his house to wait for Duncan to come back from his adventure because he could have been exposed to more damage due to the water leakage. Overall, Fred could recover his costs using the law of tenements by arguing that Duncan failed to repair his property on time hence exposing him to the damage that he repaired using his own money while it was the responsibility of Duncan. 

The delict law (Scotland) will also support Fred’s claim in this case. Fred could argue that Duncan owed him a duty of care and had subsequently breached the duty of care when he failed to inform him of his trip and leave him his keys. It was Duncan’s responsibility to look for Fred and leave him the key to his house.  According to Macqueen, the delict law affirms that a neighbour could owe another neighbour a duty of care in cases where they have common interests in particular areas. In this case, Fred and Duncan share an apartment, meaning that they have to engage in actions that safeguard each other’s space. In fact, Fred could argue in line with the case Muir vs. Glasgow Corporation (1943) to prove that Duncan owed him a duty of care, and that he had suffered a loss due to the breach of this duty. Duncan’s breach of the duty of care by failing to inform him and leaving him his keys had made him pay for unnecessary repairs. Therefore, he is right to claim the full recovery of the money incurred in the course of the repairs. Duncan is liable to pay the wrongful loss suffered by Fred because of the breach of the duty of care, in their neighbour relationship. 

More so, Fred could win this case and recover the costs incurred in the repair of the door and the water pipe by proving that Duncan was unnecessarily negligent in this matter. Duncan knew clearly that he was going for an adventure, but he negligently failed to inform his neighbour, Fred, about this trip. Forgetting to inform Fred about the trip to the Amazon is a clear indication of his negligent nature and the failure to act in line with the expectations of a neighbour to neighbour relationship in a flat.  In Reid’s view, it will be easy for Fred to prove negligent actions on the part of Duncan using initial cases when he had been informed of any trips and journeys. Apart from proving Duncan’s negligence, he could prove the injury he suffered because of this negligence. For instance, water was leaking through his ceiling. Another injury is monetary injury where he had to pay for the costs of repairs in Duncan’s absence. This argument and the proof of facts will play an instrumental role in ensuring that he recovers all the costs suffered in carrying out these repairs. Thus, Duncan acted negligently by failing to update him on his journey to the Amazon, and he needs to pay Fred for the costs suffered in making repairs to his apartment. 

In conclusion, Fred will find it simple to prove this case if he follows the provisions of the delict law (Scotland) and the law of tenements (Scotland). These laws contain effective and reliable guidelines that would play an instrumental role in leading to the recovery of the amounts used in these repairs. For instance, Fred could adequately prove that Duncan owed him a duty of care as a neighbour. The failure to inform him of his departure and the failure to repair his water pipe earlier justify the breach of the duty of care. Additionally, he could argue from the tenements law perspective by affirming that Duncan had failed to fulfil his duties hence exposing him to injury. The failure to repair the water pipe had led to the leakage. Overall, Fred has an upper hand in this case because of the clarity of matters. 


May 29, 2018 in Law
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