BRIBES, SECRET COMMISSIONS AND THE MONTE CARLO GRAND HOTEL

It is a core feature of agency – where one person contractually agrees to act on behalf of another – that the agent owes a duty of loyalty to his principal. This means that an agent must disclose to his principal any profits or gains which he stands to make personally from the transaction involved. An agent is not allowed to receive a corrupt payment such as a bribe to act in a way which is not in his principal’s interest. Indeed, to prevent an abuse of the relationship, even if an agent does not act corruptly, he cannot retain any personal profit made in a transaction relating to his principal unless that profit (for instance an additional commission) has been disclosed to and approved by the principal. So, in Boardman v Phipps a solicitor who made a large profit for a trust was prevented from keeping the profit he made for himself because it had not been agreed by all the trustees and beneficiaries. It was never suggested that he acted dishonestly.