An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business unless the principal has notice of his want of skill.
The agent is always bound to act with reasonable diligence, and to use such skill as he possesses;
and to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want of skill, or misconduct.
Legal Commentary & Landmark Judgments: Section 212
An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business, unless the principal has notice of their want of skill. The agent is always bound to act with reasonable diligence, and to use such skill as they possess; and to make compensation to their principal in respect of the direct consequences of their own neglect, want of skill, or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect.
The statutory limitation restricting damages to direct consequences applies the principle of Hadley v. Baxendale, shielding negligent agents from remote or unforeseeable market fluctuations.
Real estate brokers, investment portfolio managers, and commercial agents owe fiduciary standards under Section 212. If a broker fails to conduct customary title searches or sells to an insolvent buyer without checking creditworthiness, they are personally liable to the principal for the direct financial loss.