Duties agent owes to principal Flashcards
Agent owes principals
A. In return for reasonable compensation and reimbursement of expenses, agents owe principals:
a. Duty of CARE
b. Duty to OBEY instructions that are reasonable (cnat be to break law or lie)
c. Duty of LOYALTY. Agent may never do any of the following
i. Self-dealing: cannot receive a benefit to the detriment to the P
ii. Usurping the P’s opportunity, or
iii. Secret profits: making a profit at the principal’s expense without disclosure
B. Hypo: P authorizes A to buy diamonds. A spots diamonds and secretly buys them for herself for $1mil. A then resells the diamonds for $2 mil.
a. What duties has A breached?
i. Breached a duty of loyalty by
1. Self dealing b/c she benefited herself to P’s detriment.
2. Usurping P’s opportunity
3. Making a secret profit in the resale.
ii. Remedies
1. P may recover losses caused by the breach, including indemnity from the agent
2. Principal may disgorge profits made by breaching A
