Agency - Duties Agent Owes to Principal

Question 1

In return for reasonable compensation and reimbursement of expenses, agents owe principals:

Answer 1

1. Duty of care;
2. Duty to obey instructions that are reasonable;
3. Duty of loyalty.

Question 2

What is required under the duty of loyalty of principals?

Answer 2

Cannot do any of the following:

1. Self-dealing - Agent cannot receive a benefit to the detriment of the principal;
2. Usurping the principal’s opportunity;
3. Secret profits: making a profit at the principals expense without disclosure.

Question 3

If an agent violates the duty of loyalty owed to a principal, what are the possible remedies?

Answer 3

The principal may recover:

1. loses caused by the breach, including indemnity; and
2. May disgorge profits made by the breaching agent.

Question 4

What does the principal owe the agent?

Answer 4

1. Reasonable compensation and

2. reimbursement of expenses.