McNeil v Law Union and Rock Insurance Company [1925]

Facts

  • A third party to an agency agreement sought to renew his commercial insurance contract with the defendant company (principal) via a broker
  • In order to retain the third party as a customer, broker concluded the renewal under the agency of the claimant, with no effort on the part of the agent
  • By doing this, the customer could pay a lower price for his renewal

Issue

  • Could the agent claim commission on the insurance renewal from his principal?

Decision

  • No

Reasoning

  • An agent may only earn commission on a contract to which he is the “efficient cause” (effective cause)
  • As the broker had carried out all of the work, no commission was payable to the agent, who had done nothing more than sign the agreement
RELATED CASE  Drughorn [1919]

Posted in Commercial Law Revision Notes.

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