Agency 2 Flashcards
Agent’s Duties to principal
Agents Duties: C O L D
•Reasonable care
• Loyalty
• Obedience
• Express contractual duties
Fiduciary duties: agent is a fiduciary of its principal and owes fid’ duties, even if unpaid agent.
- An agent (even an unpaid one) is a fiduciary of their principal.
- Agent owes
– the express Contractual duties AND
– the fiduciary duties of loyalty, obedience to lawful instructions, and reasonable care under the circumstances (including disclosre of relevant info).
Duty of CARE: Carry out agency with reasonable care.
(sliding scale depending on any special skills that the agent may have)
(reasonable agent would act under the circumstances
- Cts will probably expect a gratuitous agent to put less effort into being careful than they would expect a paid agent to exercise
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DUTY OF LOYALTY: Agent owes duty of undivided loyalty to Principal. Includes obligations:
An agent…
• may not use their position as agent to profit for themselves.
– If they do, account to Pr for profits made while carrying out the principal’s instructions.
• must act solely for benefit of Pr and not act for himself or thrid party
- must refrain from dealing with Pr’ as an adverse paerty or from acting on behalf fo adverse party
- may not compete with principal concering the Subject Matter of the agency.
- may not use Ps property (including CI) for agents purposes or a third party’s purposes.
Remedy: Pr’ can sue for daamges, or equitable remedy of disgorgement.
DUTY OF OBEDIENCE: Agency must obey all reasonable (lawful) directions of their principal.
- liabel for loss. If the agent disobeys a reasonable direction, the agent will be liable to the principal for any loss that the principal suffers.
Principal’s Remedies for Agent’s Breach of Duties
Principal’s Remedies for Agent’s Breach of Duties:
•Contract remedies (if agent compensated)
• Tort remedies
- equitable actions for an accounting,
• Constructive trust
- imposition of a constructive trust (an equitable remedy whereby a “trust” is imposed to transfer property gained through unjust enrichment back to the intended party, meaning, from the wrongdoing agent to the principal),
• Action for secret profits
• Withhold compensation:
- withholding of compensation for intentional torts or intentional breaches of fiduciary duty.
• Terminate agency: The principal may also terminate the agency prior to any termination date in a contract.
The principal may recover the actual profits or properties held by the agent whether or not the agent’s profit has caused the principal any loss.
When it comes to breach of fiduciary duty, note that a wide range of equitable remedies are available to a court.
In general, a court can do whatever it wants to “do justice” in the situation.
Subagents
A subagent is a person appointed by an agent to perform functions that the agent has consented to perform on behalf of the agent’s principal.
*Note: NOT every person appointed by an agent is a subagent.
- An agent may also appoint a coagent (that is, another agent of the principal). In doing so, the agent does not delegate their own power to that person.
- Employees of a single organization are presumed to be coagents, not subagents (for example, manager and store clerk are coagents).
a. Liability of Agent
An agent has absolute liability to the principal for breaches by a subagent.
b. Duties
- If the principal authorized the agent to appoint the subagent, the subagent owes the principal the same duties as the agent owes the principal.
- If the agent was not authorized to appoint a subagent, the subagent does not owe duties to the principal but does owe duties to the agent.
Principal’s Duties to the Agent
Not fiduciary in nature. (fiduciary duties are only from agent to Pr).
Principal has OBLIGATIONS to agent:
•Compensation: Reasonably Compensate agent for services (inferred unless agmt otherwise).
- If agmt is silent on compensation, agent entitled to reasonable compensation.
- Prinicpal has not duty to compensate subagent even if the agent had authority to hire the subagent.
• Cooperation: The principal also generally should cooperate with the agent and not unrea- sonably interfere with the agent’s performance.
•Indemnity/reimbursement
- Reimbursement for expenses
- Indemnify A’s losses in carrying out principal’s instructions (reimburse).
- If agent incurs expenses or suffers losses in carrying. out pr’s instructions, pr has a duty to indemnify agent.
•Express contractual duties: duties imposed by their K
a. Agent’s Remedies for princnipal’s breach.
A compensated agent has the usual contract remedies against the principal (but has a duty to mitigate damages).
•Contractual Remedies
•Possessory lien
Real Estate Brokers’ Contracts
In a typical real estate broker’s contract, the broker is entitled to compensation when there is a buyer ready, willing, and able to purchase the property.
If the seller/principal refuses a buyer’s offer that was within the terms agreed by the broker/agent and the seller/ principal,
the seller/principal will be found to be breaching the duty not to interfere with the agent’s duties and will owe the agent their agreed compensation.
