Rights and Duties Between Principal and Agent

Question 1

What duties does an agent owe its principal?

Answer 1

1. express K duties
2. fiduciary duty of loyalty
3. obedience to lawful instructions
4. reasonable care under the circumstances (including duty to disclose all relevant info)

Question 2

What are the principal’s remedies against an agent?

Answer 2

1. contract actions
2. tort actions
3. actions for secret profits
4. equitable actions for an accounting
5. withholding of compensation for intentional torts or intentional breaches of fiduciary duty

Question 3

What damages may a principal recover from an agent who breaks the duty of loyalty?

Answer 3

the actual profits or properties held by the agent whether or not the agent’s profit has caused the principal any loss.

Question 4

Who is a subagent?

Answer 4

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

Question 5

What is the liability of an agent for a subagent?

Answer 5

The agent has absolute liability to the principal for breaches by a subagent.

Question 6

What duties does the subagent owe the principal?

Answer 6

if appointed with proper authority, the subagent owes the principal the same duties as the agent. If the subagent is unauthorized he owes no duties to the principal, but does owe duties to the agent.

Question 7

What duties does the principal owe the agent?

Answer 7

1. K duties
2. reasonable compensation
3. reimbursement for expenses

~also generally cooperate and don’t interfere with agent’s performance

Question 8

If an agency agreement is silent regarding compensation, what compensation is agent entitled to?

Answer 8

Reasonable compensation. Note: principal generally owes no duty to compensate a subagent even if the agent had authority to hire the subagent.

Question 9

What are the agent’s remedies against the principal?

Answer 9

1. usual K remedies (with duty to mitigate)

2. right to a possessory lien for any money due from principal, including compensation owed for services

Question 10

In a real estate broker’s contract, what is a nonexclusive K?

Answer 10

generally entitle the agent to compensation upon his production of a ready, willing, and able buyer even though sale is not consummated

Question 11

In a real estate broker’s contract, what is an exclusive K?

Answer 11

exclusive K enable the broker to get his commission if anyone produces a ready, willing, and able buyer.

Question 12

What is the duty of loyalty?

Answer 12

Undivided. If an agent has interests adverse to the interests of his principal (self-dealing or obtaining secret profits), he breaches this duty by failing to disclose them.

Question 13

What is the duty of obedience?

Answer 13

1. agent must obey all lawful instructions even if he thinks his way is better
2. interpretation of instructions must be reasonable, determined from standpoint of reasonable person in agent’s position under all circumstances

Question 14

What is the duty of reasonable care?

Answer 14

1. an agent owes a duty to her principal to carry out her agency with reasonable care in light of local community standards and taking into account any special skills of the agent

(usually doesn’t differ too much when gratuitous agent)

2. Duty to notify of all matters that come to agent’s knowledge affecting the subject of the agency.

Question 15

What is the liability of a subagent to an agent?

Answer 15

Same as subagent owes the principal. She will be liable to the agent for her breaches.