KELLY v.
COOPER
[1993] AC 205
TABLE OF CONTENTS
01 FACTS 02 ISSUE & RULE
03 ANALYSIS 04 CONCLUSION
01
FACTS
FACTS
Mr. Kelly was the owner of Caliban, a house in
Tucker’s Town in Bermuda, fronting on to the
ocean.
Adjacent to Caliban, on the west, was another
house Vertigo belonging to Mr. Brant.
Both the houses had access to Beach which
remained mostly quiet.
Since 1979, Caliban was put up on sale and
employed defendants as agents for the same.
The price was set at $3.5 Million.
FACTS
In 1985, an American Mr. H. Ross Perot
showed interest to buy both houses. On 20th
April, Mr. Perot made an offer on Vertigo for
$2 Million which was accepted on 22nd April.
On 23rd April an offer of $2.5 Million was made
for Caliban, which after having a few
reservations, was accepted by Mr. Kelly.
The purchase of Vertigo was completed on 16th
June 1985 and of Caliban on 13th November
1985.
Both the houses now belong to Mr. Perot and
his family.
FACTS
Now, Mr. Kelly was made aware that both the
houses belonged to one person and that their
was the one agent who dealt for both houses,
but he was not aware of these facts.
He claimed that his agent never disclosed this
‘material information’ and denied paying the
commission.
Kelly, as the plaintiff brought a lawsuit against
Cooper. The decision of the Court of Appeal of
Bermuda found the defendant to be guilty and
forfeited their commission.
Defendant challenged this decision before the
House of Lords.
02
ISSUE
ISSUE 1 ISSUE 2
Whether the agent was in breach of Whether the agent was entitled to his
his contractual and fidicuary duty commission, even after he
towards the plaintiff by withholding deliberately held the material
the material information which might information or not.
affect his decision or not
03
RULE
RULE
Law of Agency
When one party (the Principal) engages another party (the Agent) to act for him,
for example, to do his work, sell his goods, manage his business, etc., a legal
relationship of the agency is established.
The law of agency governs the legal contract between the principal, the agent,
and the other third parties they deal with.
04
ANALYSIS
ANALYSIS
The lords in this case, analyses that two sales were
not legally interdependent and that there were no
findings to support Mr. Perot has special interest in
buying this property or that the judge’s assessment
of damages awarded, since the defendant’s were not
in the breach of duty.
Lords agrees that prior knowledge that Mr. Perot
buying Vertigo, would have resulted in successful
negotiation for the price of Caliban, but the
defendant’s were still in no breach of contractual
obligation.
ANALYSIS
Using New Zealand Netherlands Society “Oranje”
Inc. v. Kuys [1973] 1 WLR 1126 and Hosiptal
Products Ltd. v. United States Surgical Corporation
(1984) 156 CLR 41, as precedents, it was drawn that
scope of fiduciary duties owed by the defendants to
the plaintiff were to be defined by the terms of the
contract of agency.
Lordships also drew the conclusion that following
the contract of agency, plaintiff had the knowledge
that the defendants might have to keep some
information as confidential and that they agreed to
it.
ANALYSIS
Also to their findings, they analysed that there was
no evidence submitted as to the attitude adopted
towards the claim that knowledge of fact would
have resulted in Caliban’s price being more than
$2.5 Million. The only evidence was that it was
worth less than it got sold for, and that it would have
been a chance probability.
05
CONCLUSION
In the present case the plaintiff did not allege, nor did the judge find any bad faith by the
defendants, and hence directed the plaintiff to pay the defendants their commission due.
No breach is found in the contract of agency when the material information is withheld by
the agent from the principal in good faith or due to the nature of the information, if not
directed by the contract.
CONCLUSION
