Rights and duties of principals and agents

An agent has the duty to use reasonable skill and

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An agent has the duty to use reasonable skill and care when acting for the principal An agent has the duty to use any special skill or knowledge the agent represents himself as having when acting for the principal If the agent breaches the duty a. A loses the right to indemnification for losses A suffered that were cause by A’s breach b. P may terminate contract 3. Duty to Inform To notify P of any relevant information a. Exs. insolvency of T, better offer If A breaches duty b. P may terminate contract 4. Duty to account (note difference from text) An agent has a duty to maintain and provide P with an account of all funds or property received by A or expended on P’s behalf An agent has a duty to account to and turn over to P any financial benefit A received as a result of transactions conducted on behalf of P Includes financial benefits such as bribes kickbacks or gratuities
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An agent has a duty not to commingle the funds of P and A i.e., to keep funds separate If breached Agent liable to turn over any benefits received P may terminate contract 5. Fiduciary duty An agent has a duty of undivided loyalty and good faith to P The duty requires that A cannot serve his own interests or those of T, but must act solely for the interests of P. If A breaches fiduciary duty P may disaffirm (rescind) contract made by A Even if P suffers no damage or loss, where A has represented the interest of the other party to the transaction (T or A) where the other party knows of the dual representation, But not if T is “innocent” A loses right to compensation, reimbursement, indemnity PRINCIPAL’S DUTIES Compensation (unless gratuitous) Reimbursement Indemnification of losses incurred by A not result of A’s breach of duty or other misconduct To do what is reasonably necessary to enable A to perform e.g., providing materials Not to interfere with A’s performance e.g., assigning another A to A’s exclusive territory
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