De Bussche v Alt
Rule established
Where an agent authorised to appoint another to act for the principal does so, that person may stand in a direct fiduciary relationship with the principal and must account to him for any secret profit.
Facts
- The plaintiff owned a ship and engaged agents to sell it in India, China or Japan at not less than a stated price.
- The agents were authorised to appoint sub-agents to effect the sale.
- They appointed the defendant, Alt, in Japan.
- Alt was unable to find a buyer at the stated price and instead purchased the ship himself at that price, with the agents' knowledge.
- He shortly afterwards resold the ship at a considerably higher figure.
- He did not disclose to the principal that he was the purchaser or that he had resold at a profit.
Issue
- Whether a person appointed by an agent to act for the principal owes fiduciary duties directly to the principal, so as to be accountable for a secret profit.
Held
- The defendant was accountable to the principal for the profit. Although appointed by the agents, he had been placed in a position of trust in relation to the principal's property, and in the circumstances a direct fiduciary relationship arose between him and the principal. A person occupying such a position cannot purchase the subject matter of the agency for himself and retain a profit on resale without full disclosure and consent.
Ratio Decidendi
Where the original agent had authority to name another to act for the principal, and the person so named is entrusted with the principal's property, privity and fiduciary obligation may run directly to the principal. The duty not to make a secret profit attaches to the position of trust rather than to the form of the appointment.
How to use it in an exam
- Illustrates the substituted agent analysis under S.194 of the Indian Contract Act, contrasted with the sub-agent position under S.191 and S.192.
- Use with Calico Printers Association v Barclays Bank (1931) to show the two possible outcomes of delegation: no privity for a sub-agent, direct privity for a substituted agent.
- The secret profit dimension also supports S.215 and S.216 on an agent dealing on his own account.
- Note the recurring principle that the remedy for breach of the duty is an account of the profit, not merely damages.
Source
Source: (1878) 8 Ch D 286; authority on substituted agency and direct accountability; citation and bench checked against Indian Kanoon and reported sources, audit of 12 August 2026
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.