the issue Discuss whether Zaidi has breached his duty as an agent. 2. Presuming that Mamat has offered RM5,000 as a commission to Zaidi, explain the legal implications of Zaidi’s action. (- 10 - not to make any secret profits) 3. If Haziq ratified the act of Zaidi, but upon the execution of transfer of lands, he refused to honour the contract because this ratification came too late

1. GROUP MEMBERS
1. SARAH HUMAIRA BT MOHD RADZI (061209)
2. NUR ADINI BINTI AB RAHMAN (061234)
3. NIK AMNEE AMIRAH BINTI MOHAMAD RIZAL (061184)
4. MUHAMMAD BAIHAQY BIN MOHD SAIDI (061215)
Please form groups of 3 to 5 students. Discuss and answer this question. Please submit your
answer in this forum using essay and ILAC format. Please include names of your group
members with your answers.
TUTORIAL QUESTION
Zaidi was appointed by Haziq to be his agent for the selling of two adjacent lots of land. Haziq
told Zaidi that the price of both lands should not be less than RM100,000. Zaidi received two
offers to buy the land, one from Mamat, at a price of RM 130,000 for each land and the other
from Ramli, at a price of RM 120,000 and RM 100,000 respectively. After a series of
negotiations, Zaidi decided to accept Mamat’s offer. It was later found out that Mamat is actually
Zaidi’s cousin.
1. Discuss whether Zaidi has breached his duty as an agent.
2. Presuming that Mamat has offered RM5,000 as a commission to Zaidi, explain the legal
implications of Zaidi’s action. (- 10 - not to make any secret profits)
3. If Haziq ratified the act of Zaidi, but upon the execution of transfer of lands, he refused
to honour the contract because this ratification came too late.

2. ISSUE 1
Zaidi decided to accept Mamat’s offer which lands at a price of RM130, 000 each. It turned
out that Mamat is Zaidi’s cousin.
Issue
Whether Zaidi had breached his duty as an agent
Law and Application
S.164-178 CA 1950 stated that Zaidi owes several duties towards Haziq as his Principal arises
from the agency relationship.
1) Zaidi has a duty as agent to avoid his interest in conflict with his duty (s 164)
● Zaidi must comply with Haziq’s direction, which is to sell the land at a certain
price given which is not less than RM100,000. In this case, although both Ramli
and Mamat had offered the price which is more than stipulated price, it is best for
Zaidi to choose the offer made by Ramli to avoid the conflict of interest. This is
because one of Zaidi's duties is to avoid the conflict of interest as his primary
duty is to act solely on Haziq’s interest.
● In the current case, Zaidi had already accepted the offer made by Mamat who is
also regarded as his cousin. Therefore, in this situation after the principal found
out this matter, Haziq may elect to rescind or to stay with the contract.
● This is following the case of Amstrong v Jackson whereby; the transfer of his
own shares was made to P, thus the court decided that the contract may be
rescinded.
● Wong Mun Wai: agent failed to disclose the fact that the transaction is between
the principal and his wife. Unless it is upon disclosure and the principal's choice,
the principal may set aside the contract and claim profit made by the Agent.
Conclusion

3. ● Zaidi had breached his duty as an agent towards Haziq as he had let the conflict of
interest occur since Mamat is his cousin based on S 164. Therefore, Haziq upon finding
out this conflict of interest may choose either to rescind or continue with the contract.

4. ISSUE 2
Presuming that Mamat has offered RM5,000 as a commission to Zaidi, explain the legal
implications of Zaidi’s action.
Issue
Whether the RM 5000 commission Zaidi received from Mamat is considered a valid and legal
transaction?
Whether Haziq is entitled to dismiss Zaidi as his agent from breach of duty?
Law
● The agent should not make any secret profit out of the performance of his duty. The term
secret profit refers to any profit made by an agent from time to time without the
knowledge of his principal.
● If the agent does not obtain the consent of his principal the principal may be entitled to
repudiate the transaction or contract as a result the agent should not make a secret profit
in his own account.
● Section 168 of CA explained, if an agent deals on his own account in the business of
the agency, without first obtaining the consent of his principal the principal may repudiate
the transaction
● According to Section 169 of CA, it is explained that if an agent deals in the business of
an agency on his own without the knowledge of the principal, the principal is entitled to
claim from the agent any benefit which may have been obtained from the transaction.
● Based on Section 173 of CA, it stated that an agent who is guilty of misconduct in the
business of the agency is not entitled to any remuneration in respect of that part of the
business which he has misconducted.
● Besides that, if an agent makes any secret profit out of the performance of his duty, the
principal may dismiss the agent for breach of duty.
● Last but not least, the principal may sue the agent and the third party giving the bribe for
damages for any loss he may have sustained through entering into the contract.

5. Application
● In this case, Zaidi holds several duties as agent towards Haziq. As an agent who is
bound to his principal’s instructions, Zaidi is not allowed to deal in business without
Haziq’s knowledge.
● Thus, if an agent breached his duty to obtain secret profit, applying to Section 169 of CA,
Haziq as Zaidi’s principal, has right to recover the amount of secret profit gained by
Haziq.
● This can be referred to the case of FHR v CEDARS, where the Supreme Court held that
a secret commission accepted by an agent is held on trust for his principal, not only did
the principal have a right to sue for the sum equal to the benefit the agent had received,
but that the principal has a proprietary interest in that benefit
● Furthermore, it can be supported by the case of Tan Kiong Hwa V Andrews S.H.
Chong (1974) 2 Mlj 188, where the court held that the P was entitled to recover RM
9000 from the D as the D had breached his duty as an agent
● Applying to Section 168 of CA, as Zaidi has performed a misconduct on his duty by
obtaining secret profit without Haziq’s consent, Haziq as principal is entitled to repudiate
the contract.
● In connection with Section 173 of CA, an agent who is guilty of bad control in the
business of the agency is not entitled to any remuneration in respect of that part of the
business which he has misconducted. Thus in this case, Zaidi shall not be entitled to
receive remuneration from his service as a result of his misconduct in view of the fact in
this case that he has obtained the secret profit without Haziq’s knowledge.
● In this case, as a result of Zaidi’s misconduct, Haziq is entitled to dismiss Zaidi as his
agent from a breach of duty.
● This can be referred to the case of Boston Deep Sea Fishing and Ice Co. v. Ansell
(1888) 39 Ch D 339, Ansell was dismissed because he was found incompetent and was
being sued for wrongful dismissal.The court held that the dismissal was justified due to
the secret dealing.
● Next, Haziq is entitled to sue Zaidi, his agent and Ramli the third party for conspiring to
obtain the secret profit and to obtain land by bribe. It is on Haziq to discover that Zaidi
had received RM 5000 from Ramli as commission if he can sell the land to Ramli.

6. ● Referred to the case of Mahesan v. Malaysian Govt. Officers Co-operative Housing
Society Ltd [1978] 1 MLJ 149, where the society discovered the fact only after the sale
was done and discovered the appellant had received $122,000 as a bribe or secret
commission from the vendor on account of the sale. The Privy Council held that the
respondent could recover either bribe or the amount of the actual loss suffered by it as a
consequence of entering into the contract.
Conclusion
In conclusion, RM 5000 commission Zaidi received from Mamat is is illegal transaction and
bribe. Thus, Haziq is entitled to dismiss Zaidi as his agent from breach of duty

7. ISSUE 3
If, Haziq ratified the act of Zaidi, but upon the execution of transfer of lands, he refused to honor
the contract because this ratification came too late.
Issue
● When does the ratification have taken effect?
Laws
● S 149 of CA provides that when an agent does an act on behalf of principal without the
knowledge of the principal, the principal then has the choice either to ratify (accept) or to
reject the contract.
● Whereby the effect of ratification can be traced in the case of Willson v Tumman;
another person’s act that was done on behalf of P which later ratified by principal will
bound the P.
● S 150 of CA stated that ratification can be formed by 2 options. First, by express
ratification and second by implied ratification.
● The ratification will have a retrospective effect whereby it will take effect upon the date
of ratification or when the contract was previously concluded.
● Bolton’s case defendant attempt to withdraw ratification is ineffective, contract is valid
Application
● In this case, Zaidi had accepted the offer made from Mamat without disclosing to Haziq
(Principal) that Mamat was actually his cousin to avoid the conflict of interest.
● However, if it was presumed that Haziq had actually ratified the act of Zaidi either by
express or implied by selling the land to Mamat, therefore Haziq is said to have accepted
the contract.
● With that, the ratification will take place from the day Zaidi accepts Mamat’s offer and not
during the transfer. This is because ratification works retrospectively whereby it started
from the date of contract and not from date of ratification.

8. ● Once Haziq ratified, he could not later refuse to transfer land as that would amount to
breach.
Conclusion
The ratification tools effect retrospectively which is when Zaidi accepts Mamat offer and thus,
Haziq is stopped to deny Mamat’s right to the said land he had purchased.