Duties of Agents (fiduciary Duties Flashcards
Tarnowski v. Resop (Minn. 1952)
Facts: Jukebox case! A reports to P jukeboxes working, less than 6 months old, 75 jukeboxes generating $3000/mo. P finds out this aint the truth, rescinds K w seller, wins, then discovers A received $2000 secret payment. P wants it
Issue: Can P recover secret commission A received?
Hold: Yes. Rescind K & Disgorgement
Rule: All profits made by A in course of agency belong to P regardless of fruits of performance. NO SECRET COMMISSION Reasoning: Doesn’t matter if P is whole, suffered no damage, or if transx was profitable for him
Efficient? Yes, want A to act for P’s best interest. Strips away A’s incentives to take for himself
In re Gleeson (Ill. App. 1954)
Facts: Gleeson dies before farm season, Colbrook (tenant) now trustee, worried about field dying, so farms it & pays more rent. Issue: Can trustee engage in activities related to trust?
Hold: No way Jose.
Rule: All profits made by A in course of agency belong to P regardless of fruits of performance.
Reasoning: No justification for dealing w trust property. Ct says to fulfil loyalty duty, trustee should have chosen either farm land and resign as trustee, or don’t farm and don’t resign.
Efficient? Ct concerned about trustee taking $ for self. If a P-A relationship, trustee could go ask, but P DED.
Restatement (Third) Of Agency § 8.01 (2006) Duty of Loyalty
An agent has a fiduciary duty to act loyally for the principal’s benefit in all matters connected with the agency relationship.
Restatement (Third) Of Agency § 8.02 (2006) Material Benefit arising out of Position
An agent has a duty not to acquire a material benefit from a third party in connection with transactions conducted or other actions taken on behalf of the principal or otherwise through the agent’s use of the agent’s position.
Restatement (Third) Of Agency § 8.03 (2006) Acting as or on the Behalf of an Adverse Party
An agent has a duty not to deal with the principal as or on behalf of an adverse party in a transaction connected with the agency relationship.
Restatement (Third) Of Agency § 8.04 (2006) Competition
Throughout the duration of an agency relationship, an agent has a duty to refrain from competing with the principal and from taking action on behalf of or otherwise assisting the principal’s competitors. During that time, an agent may take action, not otherwise wrongful, to prepare for competition following termination of the agency relationship.
Restatement (Third) Of Agency § 8.05 (2006) Use of Principals property, use of confidential information
An agent has a duty
(1) not to use property of the principal for the agent’s own purposes or those of a third party; and
(2) not to use or communicate confidential information of the principal for the agent’s own purposes or those of a third party.
Restatement (Third) Of Agency § 8.06 (2006) Principal’s Consent
(1) Conduct by an agent that would otherwise constitute a breach of duty as stated in §§ 8.01, 8.02, 8.03, 8.04, and 8.05 does not constitute a breach of duty if the principal consents to the conduct, provided that
(a) in obtaining the principal’s consent, the agent
(i) acts in good faith,
(ii) discloses all material facts that the agent knows, has reason to know, or should know would reasonably affect the principal’s judgment unless the principal has manifested that such facts are already known by the principal or that the principal does not wish to know them, and
(iii) otherwise deals fairly with the principal; and
(b) the principal’s consent concerns either a specific act or transaction, or acts or transactions of a specified type that could reasonably be expected to occur in the ordinary course of the agency relationship.
(2) An agent who acts for more than one principal in a transaction between or among them has a duty
(a) to deal in good faith with each principal,
(b) to disclose to each principal
(i) the fact that the agent acts for the other principal or principals, and
(ii) all other facts that the agent knows, has reason to know, or should know would reasonably affect the principal’s judgment unless the principal has manifested that such facts are already known by the principal or that the principal does not wish to know them, and
(c) otherwise to deal fairly with each principal.
Restatement (Third) Of Agency § 8.08 (2006) Duty of Care, competence and diligence
Subject to any agreement with the principal, an agent has a duty to the principal to act with the care, competence, and diligence normally exercised by agents in similar circumstances. Special skills or knowledge possessed by an agent are circumstances to be taken into account in determining whether the agent acted with due care and diligence. If an agent claims to possess special skills or knowledge, the agent has a duty to the principal to act with the care, competence, and diligence normally exercised by agents with such skills or knowledge.
Restatement (Third) Of Agency § 8.09 (2006) Duty to act only within scope of Actual Authority and to comply with principal’s Lawful instructions.
(1) An agent has a duty to take action only within the scope of the agent’s actual authority.
(2) An agent has a duty to comply with all lawful instructions received from the principal and persons designated by the principal concerning the agent’s actions on behalf of the principal.
