A connection between the agent and the other party must be disclosed before the client acts
A worked RES examination question on commission and parties, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
Regarding her husband's shareholding in the buying company, which statement most appropriately describes her position?
The answer, and why
Answer: C
The rule. A connection between the agent and the other party must be disclosed before the client acts. It makes no difference that the interest is a family member's rather than the agent's own, nor that the holding is a minority one.
Why C is correct. The shareholding should have been disclosed before Mr Tan considered the offer.
The other options.
- A relies on the interest being her husband's
- B on it being a minority
- D on the price being within range. Each answers a different question from the one the duty asks.
Exam note. The duty is to disclose the conflict, not to demonstrate that it caused harm.
More on Commission and parties
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