Duties of The Agent and Principal To Each Other

Question 1

Agent’s Duties To The Principal

Answer 1

1. Fiduciary Duties: Duty of Care, Duty of Loyalty, Duty of Obedience
2. Duty to act with reasonable care under the circumctances

Question 2

Duty of Care

Answer 2

• An agent owes their principal a duty to carry out their agency with reasonable care.
• The degree of care is a “sliding scale” depending on any special skills that the agent might have.
• The measure of reasonableness may also vary depending on compensation.

Question 3

Duty of Loyalty

Answer 3

The Agent owes the principal a duty of undivided loyalty to the principal.

The agent must:
* not use their position as agent to profit for themselves.
* Act solely for the benefit of the principal.
* Must refrain from dealing with the principal as an adverse party or from acting on behalf of an adverse party.
* Not compete with principal concerning the subject matter of the agency.
* Not use the principal’s property for agent’s own purposes or a third party’s purposes.

Question 4

Duty of Obedience

Answer 4

An agent must obey all reasonable direction of their principal.

Failure to obey = liability for loss.

Question 5

Principal’s Remedies for Agent’s Breach of Duties

Answer 5

• Monetary damages
• Equitable Remedies
• Termination of the agency

A court can do whatever it wants to “do justice” in the situation.

Question 6

Subagent

Answer 6

A person appointed by an agent to perform functions that the agent has consented to perform on behalf of the agent’s principal.

Question 7

Coagent

Answer 7

Another agent of the principal; Can be appointed by the agent or the principal.

If the agent appoints, the agent is NOT delegating their own power to that person.

Question 8

Subagent Duties

Answer 8

• If appointment was authorized: the subagent owes the principal the same duties as the agent owes the principal.
• If unauthorized appointment: subagent only owes duties to the agent.

Question 9

Principal’s Duties to Agent

Answer 9

Principal owes the agent:
* all duties imposed by their contract;
* reasonable compensation;
* reimbursement for expenses;
* Idemnify agent’s losses in carrying out principal’s instructions

Note: These duties are NOT fiduciary in nature.

Question 10

Duty to Compensate Subject

Answer 10

Generally, a principal owes NO DUTY to compensate a subagent even if the agent had authority to hire the subagent.