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20180829 Defending your position when you inflate price

20180829 (Wed)

What can you do when you are accused of inflating the price by the buyer?

The short answer is:

“Yes, so what?” But, the longer answer is:

When a seller gives his property to an agent, he has formed an agency contract with this agent to deal with third party. This agency contract is based on the instruction given. The agent cannot act on this matter outside of his authority.

If the agent acts on a different price outside of his authority without informing his principal, he has breached his duty as an agent. Only in very special situations that he could act outside the authority – during emergency and necessity.

In most cases, this does not happen. Thus, when an agent is told to increase the price, the agent has no choice but to increase the price. The fact that he could be accused of inflating the price without authority, is for the third party to prove. In most cases, it cannot be proven. So, in law, there is no case against the agent if he acted within the scope of his duty.

Only in case when the increase in price is transacted, and the seller found out it was not his instruction, then the agent is in trouble. This is under S.168 and S.169 of Contracts Act, 1950.

S.168 Right of Principal when agent deals, on his own account, in business of agency without principal’s consent.

S.169 Principal’s right to benefit gained by agent dealing on his own account in business of agency.

In short, if secret profit is found to exist between the dealings of this agent, the principal can sue to recover the losses.

However, the third party, who has bought the property in good faith, has nothing to accuse of the agent being inflating the price. He can straight away walk off! He suffers no loss!

Tomorrow, we further discuss this matter.

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