Restatement of the Law, Agency 3rd Sec. 8 Flashcards
General Fiduciary Principle
§ 8.01 General Fiduciary Principle
An agent has a fiduciary duty to act loyally for the principal’s benefit in all matters connected with the agency relationship.
Material Benefit Arising Out of Position
§ 8.02 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.
Acting as or on Behalf of an Adverse Party
§ 8.03 Acting as or on 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.
Competition
§ 8.04 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.
Use of Principal’s Property; Use of Confidential Information
§ 8.05 Use of Principal’s 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.
Principal’s Consent
§ 8.06 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.
Duty Created by Contract
§ 8.07 Duty Created by Contract
An agent has a duty to act in accordance with the express and implied terms of any contract between the agent and the principal.
Duties of Care, Competence, and Diligence
§ 8.08 Duties 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.
Duty to Act Only Within Scope of Actual Authority and to Comply with Principal’s Lawful Instructions
§ 8.09 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.
Duty of Good Conduct
§ 8.10 Duty of Good Conduct
An agent has a duty, within the scope of the agency relationship, to act reasonably and to refrain from conduct that is likely to damage the principal’s enterprise.
Duty to Provide Information
§ 8.11 Duty to Provide Information
An agent has a duty to use reasonable effort to provide the principal with facts that the agent knows, has reason to know, or should know when
(1) subject to any manifestation by the principal, the agent knows or has reason to know that the principal would wish to have the facts or the facts are material to the agent’s duties to the principal; and
(2) the facts can be provided to the principal without violating a superior duty owed by the agent to another person.
Duties Regarding Principal’s Property—Segregation, Record-Keeping, and Accounting
§ 8.12 Duties Regarding Principal’s Property—Segregation, Record-Keeping, and Accounting
An agent has a duty, subject to any agreement with the principal,
(1) not to deal with the principal’s property so that it appears to be the agent’s property;
(2) not to mingle the principal’s property with anyone else’s; and
(3) to keep and render accounts to the principal of money or other property received or paid out on the principal’s account.
Duty Created by Contract
§ 8.13 Duty Created by Contract
A principal has a duty to act in accordance with the express and implied terms of any contract between the principal and the agent.
Duty to Indemnify
§ 8.14 Duty to Indemnify
A principal has a duty to indemnify an agent
(1) in accordance with the terms of any contract between them; and
(2) unless otherwise agreed,
(a) when the agent makes a payment
(i) within the scope of the agent’s actual authority, or
(ii) that is beneficial to the principal, unless the agent acts officiously in making the payment; or
(b) when the agent suffers a loss that fairly should be borne by the principal in light of their relationship.
Principal’s Duty to Deal Fairly and in Good Faith
§ 8.15 Principal’s Duty to Deal Fairly and in Good Faith
A principal has a duty to deal with the agent fairly and in good faith, including a duty to provide the agent with information about risks of physical harm or pecuniary loss that the principal knows, has reason to know, or should know are present in the agent’s work but unknown to the agent.
