Specific 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 S21(1)(b) Limitation Act 1980 (LA 1980) provides:
‘(1) No period of limitation… shall apply to an action by a beneficiary under a trust, being an action… (b) 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 a ‘fiduciary’ (i.e. the relationship being one governed by common law and not the rules of equity). The agent is not a trustee for the principal. Therefore LA 1980 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 six-year time limit prescribed by S5 LA 1980 for the making of a claim for the return of that sum will normally apply (see BIM40230).
Scotland and Northern Ireland
Note that, as per Section 41(4), the LA 1980 does not apply in Scotland or Northern Ireland. The Prescription and Limitation (Scotland) Act 1973 applies in Scotland (there is a five-year time limit on actions founded on contract under Section 6 of that Act) and the Limitation (Northern Ireland) Order 1989 applies in Northern Ireland (there is a six-year time limit on actions founded on contract under Article 4 of that Order).
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.