QUESTION 2

The issue in this case is whether Gloria has breached his duty to avoid conflict of
interest against Chia.
An agent is defined as ‘a employed to do an act for another or to represent
another in dealings with third persons’ under (Sec. 135 Contracts Act 1950). In (Sec.
137 Contracts Act 1950) : anyone who is appointed by the principal, including a
minor. But if the agent is a minor, he will not be liable for any loss caused by him to
the principal. Agency is a fiduciary relationship as an agent is employed to help the
principal in dealing with a third party. An agent is paid for his work. Thus, an agent
must act honestly in all dealings with principal and not make the principal suffer any
losses. Consequently, an agent owes several duties to the principal. If the agent
breached any of these duties, the principal has the right to take legal action
against the agent.
One of the duties of an agent is to avoid conflict of interest. An agent must
perform his duty for the interest of the principal. He must always give priority to the
interest of the principal and not allow his personal interest to influence his work. An
example of situation where there is conflict of interest is when an agent uses his
position as an agent to gain personal profit or benefit. This is known as secret
profit. Secret profit is defined as ‘any money or benefit received by the agent in
the course of her duty over and above the remuneration due to her from the
principal.’ Secret profit may include receiving a commission from third party or
obtaining discount which were not disclosed to the principal. It will not be secret
profit if the agent had disclosed the matter to the principal and obtained the
principal’s consent to keep the money or benefit.
When the agent breached the duty not to make secret profit, the principal may sue
the agent for several remedies. Under section 169 of the Contracts Act 1950, a
principal has the right to recover from the agent any benefit which he may have
obtained from the contract even though there is no loss caused to the principal. In
section 168 of the Contracts Act 1950, the principal may also repudiate the contract
made by the agent. Other than that, the principal can choose not pay the agent’s
remuneration (Section 173 of the Contracts Act 1950) and terminate the agents
service. Hence, the principal cannot sue for damages and recover secret profit at the
same time but must choose between these two remedies.
 In the case of Wong Mun Wai v Wong Tham Fatt & Anor (1987) 2 MLJ 249,
an agent had sold the principal’s land to his wife at a lower price than the market
value. The agent had breached the duty to not contract with the principal (via his wife)
and he had benefitted his wife by selling the land at a lower price instead of selling at
a higher price for the principal’s benefit. The court held that the agent had the duty to
act in good faith which he had breached by using his position to promote his own
interest over that of the principal. Similarly, in Fulwood v Hurley (1928) 1 KB 498,
the agent had acted on behalf of the principal and third party at the same time. The
agent then received commission from both parties without the knowledge or consent
or either party. The court decided that this was a conflict on interest, and the agent has
breached his duty towards the principal.
In the situation between Chia and Gloria, Gloria bought the land for Chia at the
maximum price specified by the principal. Hence, she had followed the principal’s
instruction. However, she cannot sold the land to Roger her husband without the
principal’s knowledge. Gloria should have contacted Chia and told him about there is
a plan to biuld LRT Station near Chia’s property and offered to buy the land from
Chia. This would have given Chia the choice to accept the offer or not. Instead, Gloria
had made the decision for Chia in her capacity as an agent. Although, the principal
did not suffer any loss in terms of the price of the land, this is a conflict of interest and
a breach of agent’s duty. Gloria had also made secret profit when her and her husband
as Big Properties sell the property to another investor for RM650,000. Therefore,
Gloria had breached the duty to avoid conflict of interest and the principal may take
action against her. Chia may sue Gloria and terminate Gloria’s service and not pay
commission to Gloria. Chia may also repudiate the contract to purchase the land from
the investor who bought the land and choose to either recover the secret profit
obtained by Gloria or to sue Gloria for damages.
In conclusion, Gloria has breached her duty to act in good faith to her principal
and avoid conflict of interest. I advise Chia that he should sue Gloria and claim any or
all the remedies stated above.
QUESTION 3

The issue in this case is whether there is a valid contract between Gopal and
Dynamic Finance Bhd.?
Hire purchase agreement includes the letting of goods with an option to purchase
and an agreement for the purchase of goods by instalments (whether the agreement
describes the instalments as rent or hire or otherwise). In a case where negotiations
leading to the making of the hire-purchase agreement is carried out by any person
who would be the owner under the hire-purchase agreement to be entered into, or by
any person, other than the dealer, acting on his behalf, such person shall serve on the
intending hirer a written statement duly completed and signed under (Section 4A(1A)
of Hire-Purchase Act 1967). In (Section 45(1C) of Hire-Purchase Act 1967) that is
not printed in black shall for the purposes for this Act, be deemed not to be in writing.
Section 8(1) of Hire-Purchase Act of 1967 provides that if the owner or dealer
or any person acting on behalf of the owner or dealer has made a misrepresentation
leading to the hirer entering into a hire purchase agreement as against the owner the
hirer may rescind the agreement as against a dealer or other persons which is the hirer
may sue for payment of damages.
By applying Section 8(1) of Hire-Purchase Act of 1967, Gopal has a right to request
Dynamic Finance Bhd. to fill in the incomplete sentences. This is because Dynamic
Finance Bhd. was using hand written in the Tamil languages with blue ink. In other
words, the agreement was not complete by virtue of Section 45(1C) of Hire-
Purchase Act 1967.
As a conclusion, the agreement between Gopal and Dynamic Finance Bhd. is
voidable.