Principal & Agent - A bribe or Secret Commission accepted by an Agent is held on trust for his Principal

The Supreme Court of United Kingdom in FHR European Ventures LLP and others Vs Cedar Capital Partners LLC had to decide as to 'whether a bribe or secret commission received by an agent is held by the agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or commission.' The Supreme Court also discussed fiduciary capacity of an Agent towards his Principal. In the present case, ‘A’ acted as an agent for ‘B’ to fix deal with ‘C’. The Agency Agreement contained conflict of interest clause. ‘C’ gave secret commission to ‘A’. Subsequently, when ‘B’ came to know about the secret commission, he instituted the suit for recovery of that secret commission. The Hon’ble Court held “a bribe or secret commission accepted by an agent is held on trust for his principal.”

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