When Must An Agent Refund Money Paid for his Master/Principal? Daily Law Tips (Tip 743) by Onyekachi Umah, Esq., LL.M, ACIArb(UK)
Introduction:
It is common to find a person/company that work through another person/company. This nature of affairs creates agency, where a master/principal acts through another person (agent). In such circumstances, the actions and inactions of an agent are deemed to be that his/her master (principal). So, a person that acts through another person, acts through himself. Then, one wonders, when agents must refund money paid to their masters and not wait for their masters to order/permit for such repayment?
Agents and Money:
Most people are often comfortable to deal with agents on all issues, but payment of money. People are more comfortable to pay masters directly and not their agents. Well, there are inevitable circumstances where no person can pay or go to a master/principal except through an agent. So, if in such circumstance, money have been paid to an agent, when must an agent refund money paid for his master/principal?
There is no better way to answer the question, other than through the judgments and decision of Supreme Court of Nigeria. The Supreme Court of Nigeria is the apex court in Nigeria and has the final power over all issues before any court in Nigeria. So, hear the wisdom of the Supreme Court;
“In Bowstead on Agency, 12th Ed. Article 124 thereof, the learned author stated as follows:- “Where money is paid to an agent for the use of his principal, and the circumstances of the case are such that the person paying the money is entitled to recover it back, the agent is personally liable to repay such money in the following cases namely:- (a) … (b)… (c) where the money is paid under a mistake of fact, or under duress, or in consequence of some fraud or wrongful act, and repayment is demanded of the agent, or notice is given to him of the intention of the payer to demand payment, before he has in good faith paid the money over to, or otherwise dealt to his detriment with the principal in belief that the payment was a good and valid payment.” Per WALTER SAMUEL NKANU ONNOGHEN ,J.S.C ( P. 17, paras. A-E ) in the case of FBN PLC v. OZOKWERE (2013) LPELR-21897(SC).
Conclusion:
An agent of a known/disclosed principal is often not held responsible for his actions and inactions, rather his master is responsible for such. Well, this position changes at some point. There are circumstances where an agent is expected to be held responsible for money paid and received by him on behalf of his principal. And, in such circumstances, the argument that an agent forwarded the money to his principal does not exempt the agent from liabilities. The circumstances include; where the money was paid to an agent by mistake, fraud, force or a demand for refund was made to the agent, before money was forwarded to a principal.
My authorities, are:
- The judgment of the Supreme Court of Nigeria in the case of FBN PLC v. OZOKWERE (2013) LPELR-21897(SC).
- The judgment of the Court of Appeal in the case of MR. ONYEBUCHI NWOBU v. CHIEF AMOBI ANARA (2020) LPELR-49944(CA).
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