BIM40220 - Receipts: unclaimed balances: legal status of an agent
Agent is not a trustee for the principal
If money is held in trust, the Limitation Act does not apply. This is because Section 21(1)(b) of the 1980 Limitation Act, provides:
‘…no period of limitation shall apply to an action by a beneficiary under a trust to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee or previously received by the trustee and converted to his use’.
The relationship between principal and agent makes the agent what is called a fiduciary (the relationship being one governed by common law and not the rules of equity). The agent is not a trustee for the principal. So the Limitation Act does apply to agents.
Thus where a trader has an unclaimed balance resulting from a transaction with a customer in which he has acted as agent the 6-year time limit prescribed by the Limitation Act 1980 for the making of a claim for the return of that sum will normally apply.
Health warning
This page is part of the section of the Business Income Manual on unclaimed balances. You should read the whole section to understand this topic: see the contents page at BIM40200.
