Duties of Agents and Principals

Question 1

Agent’s Duties Owed to Principal

Answer 1

Duty of Care

Duty of Loyalty

Duty to account for money or property received on Principal’s behalf

Duty to keep Principal’s assets separate from Agent’s assets

Duty of Candor

Question 2

Agent’s Duty of Care to Principal

Answer 2

Agent must:

+ follow Principal’s instructions

+ perform duties with reasonable care, AND

+ indemnify Principal for loss caused by Agent’s failure to act with reasonable care.

Question 3

Agent’s Duty of Loyalty to Principal

Answer 3

Agent must:

+ prefer Principal’s interests over Agent’s interest or the interest of others,

+ avoid self-dealing, and

+ neither compete with Principal nor usurp business opportunities belonging to Principal.

Question 4

Principal’s Duties to Agent

Answer 4

Duty of Compensation= pay Agent reasonable value of services rendered (unless agreed otherwise)

Duty of Reimbursement = Reimburse Agent for all reasonable expenses incurred in the scope of the agency relationship.