Duties of Agents & Principals

Question 1

Explain the fiduciary duty of an agent

Answer 1

Has to act on the best interests of the principal. Owns a duty of LOYALTY. Cannot make a profit at the principal’s expense

Question 2

List 5 terminations by operations of law

Answer 2

1) Principal death or agent 2) Insanity of the principal 3) Bankruptcy 4) Change of law 5) Circumstances such as loss or destruction of subject matter

Question 3

List 5 duties of parties upon termination

Answer 3

1) Fulfillment 2) Lapse of time 3) Specified event 4) Mutual agreement 5) Unilateral act by one party (You fired or I quit)

Question 4

Exception to the unilateral act by one party termination (You fired or I quit)

Answer 4

A principal cannot terminate an agency with a couple interest

Question 5

What does a termination express

Answer 5

It expresses only an implied authority NOT an apparent authority

Question 6

What are the principal and agents duties after an agent is terminated

Answer 6

Principal - Notify third parties of the agent’s termination. Agent - Honor the termination and not use apparent authority to continue benefiting from the relationship

Question 7

What are two ways lingering apparent authority can be ended

Answer 7

1) Actual notice to third parties that the agent no longer has authority. 2) Constructive notice - Publication or mailings stating that the agency relationship has been terminated