Agent's Duties to the Principal Flashcards
Fiduciary duty is:
an agent’s duty to act loyally for the principal’s benefit in all matters connected with the agency relationship
An agent must refrain from competing with its principal:
during the agency relationship
PRINCIPAL is an insurance company. AGENT is PRINCIPAL’s agent for purposes of issuing policies relating to workers’ compensation. AGENT issues a policy to THIRD PARTY. AGENT acts with apparent authority in issuing the policy, but AGENT issues the policy in a manner clearly prohibited by AGENT’s agency agreement with PRINCIPAL. An employee of THIRD PARTY suffers a job-related injury, files a claim, and PRINCIPAL must pay under the policy issued by AGENT. Which of the following is/are true?
- AGENT exceeded her actual authority in issuing the insurance policy to THIRD PARTY
- AGENT is not subject to liability to PRINCIPAL for the cost of the claim filed by the employee
- AGENT is subject to liability to PRINCIPAL for the cost of the claim filed by the employee
- AGENT exceeded her apparent authority in issuing the insurance policy to THIRD PARTY
- 1 and 3 only
1 and 3 only
Pam asks her agent Adam to sell her necklace online for her. Customer One emails Adam and offers $500 for the necklace. Adam tells Pam, who is is happy with the offer and plans to accept it. Before Customer One’s offer is accepted, however, Customer Two emails Adam and offers $600 for the necklace. Adam knows Pam would be interested in Customer Two’s offer, but it would entail more work on Adam’s part. What is Adam’s duty?
Adam has a duty to use reasonable efforts to provide information about Customer Two’s offer to Pam
PRINCIPAL CORPORATION hires AGENT as a member of its sales and marketing division. PRINCIPAL CORPORATION purchases its raw materials from MATERIALS CORPORATION. Unknown to PRINCIPAL CORPORATION, AGENT owns 95% of the stock of MATERIALS CORPORATION. Has agent breached their duty?
AGENT has breached her duty to PRINCIPAL CORPORATION because her controlling interest in MATERIALS CORPORATION makes her an adverse party in PRINCIPAL CORPORATION’s dealings with MATERIALS CORPORATION
PRINCIPAL (a financial services company) enters into a contract to employ AGENT for one year as a director of a key division. Six months later, AGENT is arrested in the PRINCIPAL’s private parking lot where AGENT has just received a shipment of illegal performance enhancing drugs for AGENT’s recreational league sports team (the sport is AGENT’s personal hobby). News coverage of AGENT’s arrest mentions that AGENT is employed by PRINCIPAL. Has agent breached her duty? Why or why not.
AGENT’s conduct breaches AGENT’s duty of good conduct to PRINCIPAL because the publicity that follows AGENT’s illegal acts indirectly involved PRINCIPAL in those acts
If an agent claims to possess special skills or knowledge, the agent has a duty to the principal to:
to act with the care, competence, and diligence normally exercised by agents with such skills or knowledge
AGENT works for PRINCIPAL’s shipping company which ships all packages with overnight delivery. One of the customers of PRINCIPAL, who needs his package shipped quickly, offers AGENT (personally) a $100 tip to ship his package with overnight delivery. Tipping is not usual in the shipping business. AGENT explains that PRINCIPAL’s company ships all packages with overnight delivery, but customer offers her the money anyway. AGENT tells PRINCIPAL about the customer’s offer, and says she plans to accept the $100 tip (personally) . PRINCIPAL agrees and AGENT accepts the $100. Did agent breach her duty?
By obtaining PRINCIPAl’s consent, AGENT has avoided a breach of her duty of loyalty to PRINCIPAL
AGENT works for PRINCIPAL in the accounting department. AGENT know a great deal of confidential information about PRINCIPAL’s business and pricing structure. THIRD PARTY approaches AGENT and asks AGENT about PRINCIPAL’s confidential pricing structure information. AGENT provides the confidential information to THIRD PARTY. Did agent breach her duty?
AGENT can communicate confidential information about PRINCIPAL to THIRD PARTY if THIRD PARTY is a duly authorized law enforcement representative
Alan is a manager at a fancy restaurant. Alan has the authority to pick the suppliers from which the restaurant buys its food. When picking a fruit supplier, Alan decides that Fruit Co. is one of the best choices (good price, reliable delivery, etc.). In addition, the owner of Fruit Co. offers to give Alan season tickets to Kansas City Royals games if Alan picks Fruit Co. as the restaurant’s supplier. Because he has authority to make the decision, Alan picks Fruit Co. as the restaurant’s supplier without discussing the matter with anyone else at the restaurant, and accepts the tickets. Has Alan breached his duty to the restaurant?
Alan, by accepting the tickets, has violated his fiduciary duty to the restaurant
