Duties, Rights and Remedies of Principal, Agent and Third Parties Flashcards
What are the duties of the principal to agent?
- Pay the agent for services rendered
- Reimburse the agent for reasonable expenses
- Indemnify the agent against liability from non-negligent duties
- Cooperate with the agent in their duties
- Treat the agent with due care
What is an agent’s remedy for a principal’s breach?
The agent may seek the usual remedies available for breach of an agency contract
Can an agent retain a lien on a principal’s property?
Yes, the agent retains a lien on any property of the principal of which he has lawful possession
What are the six duties of an agent to a principal?
- Duty of Care
- Duty of Loyalty
- Duty of Confidentiality
- Duty Not to Compete
- Duty to Account
- Duty to Candor
What is the duty of care?
- Follow the principal’s lawful and ethical instructions
- Perform duties with reasonable care
- Indemnify the principal for losses due to wrongful acts or negligence
What is the duty of loyalty?
- Prioritize the principal’s interests
- Avoid self-dealing
- Not compete with the principal or seize their business opportunities
Can an agent usurp a business opportunity?
No, an agent must not take a business opportunity that is closely related to the principal’s business
When can an employee take personal advantage of a business opportunity?
An employee can take personal advantage of a business opportunity only if the employer knows and consents
What is the duty of confidentiality?
An agent may not use confidential information obtained from the principal to the detriment of the principal
Can an ex-employee use skills learned on the job in later employment?
Yes, provided they do not disclose confidential information or breach contract terms
What is the Duty Not to Compete?
An employee can prepare to compete after leaving, as long as they don’t solicit the employer’s customers or key employees while still employed
What are noncompete agreements?
Noncompete agreements must protect a legitimate interest and be reasonable in time and area to be enforceable
What is the duty to account?
An agent must account for money or property received for the principal and keep the principal’s assets separate from their own
What is the duty of candor?
An agent must fully disclose any facts relevant to a transaction that the principal might want to know
What is the Dual Agency Rule?
When an agent represents multiple principals without full disclosure and consent, the transaction is voidable by any principal
What are the principal’s remedies for an agent’s breach of fiduciary duties?
- Damages for breach of fiduciary duties
- Transactions from breaches are voidable
- Disloyal agents must forfeit any profits
- Principal can recover without proving a loss
What is an agent’s liability to a third party on a contract signed by the agent?
If a party is aware of the principal’s existence during a transaction, the agent incurs no personal liability unless actions are taken to assume liability
How can an agent avoid personal liability?
An agent should sign documents in their name and on behalf of the principal, clearly indicating their agency role
What happens if the principal is unidentified or partially disclosed during a transaction?
The agent is presumed to be a contracting party and must clarify they are acting for a principal to avoid liability
What occurs if the principal’s involvement is unknown?
The agent is assumed to be acting independently
Does disclosure of the principal after contract execution relieve the agent of liability?
No, the agent remains liable, but the third party may choose to sue either the principal or the agent
What must a third party do upon discovering an undisclosed principal?
The third party must choose to sue either the principal or the agent and cannot later hold the other party liable
