What are the duties of an agent?Agents generally have the following duties to the principal: Loyalty, Care, Obedience, and Accounting. Show Next Article: Agent Authority to Contract for Business Back to: AGENCY LAW What is an Agent's Duty of Loyalty?An agent has the duty of loyalty to act for the principals advantage and not to act to benefit herself at the principals expense. An agent is expected to refrain from undertaking actions personally that would conflict with the purpose of the agency. An employee has a lower duty of loyalty with regard to opportunities that are outside of the employees duties or responsibilities to the employer. Generally, this means that an agent may not simultaneously represent the principal and another party to a transaction.
What is an Agent's Duty of Care?An agent has a duty to exercise due care and diligence when carrying out the responsibilities of the agency. This is often referred to as a duty to not act negligently in carrying out the principal's affairs.
What is the Agent's Duty of Information & Disclosure?The agent has a duty to protect all confidential information of the principal, such as trade secrets. Further, the agent has a duty to keep the principal fully informed of all material information acquired as a result of the agency relationship.
What is an Agent's Duty of Obedience?The agent has a duty to obey the reasonable instructions from the principal.
What is an Agent's Duty of Accounting?The agent has a duty to account to the principal for monies handled. Further, the agent may have a duty to account to third parties for whom money is handled. This includes situations where an agent collects too much money from a third party and is still in possession of those funds or when an agent intentionally collects funds that belong to the third party and the principal is undisclosed.
Principal-Agent Relationship
Discussion QuestionShould the duty of loyalty and care be the same for an agent in every situation? Why or why not? Should these duties vary depending upon whether the agent is a limited or general agent? Why or why not? Practice QuestionCarol is an employee of Rob's accounting firm. She is a CPA, but she has been thinking of breaking away from the firm and starting her own practice. One day, a representative from a large corporation walks into the CPA firm and inquires about accounting services. Carol is strongly considering offering her personal services to the representatives firm? Are there any issues in this situation?
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