Hippisley v Knee Brothers
An agent who honestly makes a secret profit does not necessarily forfeit his commission, although he must account for the profit.
Facts
Knee Brothers, auctioneers, were engaged by Mr Hippisley to sell goods for a fixed commission plus out of pocket expenses. They charged Mr Hippisley the full price of printing and advertising, but kept the trade discounts that they had received from the printers and newspapers. They honestly believed that they were entitled to do so, as was the custom. Mr Hippisley sued them for the discounts and the commission.
Legal principle
The court held that Knee Brothers must account for the discounts, but that they were entitled to keep their commission. Lord Alverstone CJ said that the agents had made a secret profit in breach of their duty, so they must account for it to their principal. But, because they had acted honestly, and the secret profit was incidental to the performance of their duties, which they had otherwise properly performed, they did not forfeit their right to remuneration. The case contrasts with cases where the agent acts dishonestly, such as Imageview v Jack.
Related cases on agency
- Armagas Ltd v Mundogas SA (The Ocean Frost) [1986] AC 717
- Bolton Partners v Lambert (1889) 41 Ch D 295
- Collen v Wright (1857) 8 E & B 647
- De Bussche v Alt (1878) 8 Ch D 286
- First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd's Rep 194
- Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
- Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549
- Imageview Management Ltd v Jack [2009] EWCA Civ 63, [2009] Bus LR 1034
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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
