EAQE Agency management and supervision question: Lam's claim against the agency

Answer: D. The agency is likely to be liable, because Derek was doing work he was employed to do, though in a forbidden way

Answer: The agency is likely to be liable. Taking the deposit was part of handling Mrs Lam's purchase; the prohibition only governed how Derek did that work. Why not the others: - The internal rule takes him outside employment: A prohibition on the manner of doing authorised work does not take the act outside the course of employment. - A director must have known: Vicarious liability does not require the employer's knowledge or fault. - Never liable for crime: An employer can be liable for an employee's dishonest act done while carrying out his duties; the EAO also makes an estate agent liable to repay money received on a client's account (section 43(1)). Rule: An act is in the course of employment where the employee does it for the purpose of and in connection with his duties, even if the employer did not authorise it and did not know of it. Source: EAA, A Study Guide to Estate Agency Law and Practice, Part 8, para 5; Estate Agents Ordinance (Cap. 511), section 43; as at Oct 2026