Duties of Agents and Principals

Question 1

Agent duties owed to principal

Answer 1

Duty of care
Duty of loyalty
Duty to account
Duty of candor

Question 2

Agent’s duty of care

Answer 2

Agent must:
§ follow Principal’s reasonable instructions,
§ perform duties with reasonable care, and
§ indemnify Principal for loss caused by Agent’s wrongful behavior or failure to act with reasonable care

Question 3

Agent’s duty of loyalty

Answer 3

Agent must:
§ prefer Principal’s interests over Agent’s interest or the interests of others,
§ avoid self-dealing, and
§ neither compete with Principal nor usurp business opportunities belonging to Principal

Question 4

Agent’s duty to account

Answer 4

Duty to account for money or property received on Principal’s behalf and keep Principal’s assets separate from Agent’s assets

Question 5

Agent’s duty of candor

Answer 5

Fully disclose all relevant facts of which Principal would reasonably want to know

Question 6

Principal’s duties to agents

Answer 6

Duty of compensation
Duty of reimbursement

Question 7

Principal’s duty of compensation

Answer 7

Pay Agent the reasonable value of services rendered (unless agreed otherwise)

Question 8

Principal’s duty of reimbursement

Answer 8

Reimburse Agent for all reasonable expenses incurred in the scope of the agency relationship