Duties of Agents and Principals

Question 1

Who owes Fiduciary duty in the Principal/Agency relationship

Answer 1

The agent owes a fiduciary duty to the principal

Question 2

What actions by a party can lead to the termination of an agency relationship?

Answer 2

• Fulfillment of purpose
• Lapse of time
• Occurrence of a specified event (wedding planner/wedding)
• Mutual agreement
• Act of one party (except agency coupled with an interest)

Question 3

What acts by the operation of law can lead to the termination of an agency relationship?

Answer 3

• Death or insanity of the principal or agent
• Bankruptcy (of the agent if it impairs his/her duties; of the principal if the agent no longer desires the relationship)
• Change of law
• Loss or destruction of subject matter

Question 4

List the duties of a principal to an agent.

Answer 4

• To comply with the agency agreement
• To reimburse reasonable expenses
• To indemnify
• To compensate for physical injury

Question 5

List the duties of an agent to a principal.

Answer 5

• Obedience
• Reasonable care
• Accounting
• Notification
• Loyalty

Question 6

List the agent’s duties of loyalty.

Answer 6

• No competition
• No conflict of interest
• No appropriation of business opportunities
• No disclosure of confidential information

Question 7

What types of authority are terminated by unilateral act, “You’re fired” or “I quit”?

Answer 7

• Express authority
• Implied or actual authority

Question 8

What types of authority are terminated by operation of law (i.e., death or bankruptcy)?

Answer 8

• Express authority
• Implied (actual) authority
• Apparent authority

Question 9

What terminates actual authority?

Answer 9

• When an agent is fired
• When an agent quits
• When an agent breaches his/her or her fiduciary duty
• When an agent dies
• When a principal dies (by operation of law, death terminates all other types of authority as well