Introduction to Agencies

Duties of an Agent

The agent owes fiduciary duties to the principal. The agent must obey the principal's instructions, show due care and diligence, and be loyal in discharging the duties of the agency. The agent has to act for the principal's benefit and not their own benefit.

The agent has a fiduciary duty to the principal. Fiduciary duty is the requirement or responsibility to work in the best interest of a person or organization. It is the highest standard of behavior, requiring the agent to show loyalty to the principal and exercise this duty in all decisions relating to the agency relationship. The agent has been granted special trust and must put the principal's interest above the agent's self-interest. The agent must maintain confidentiality at all times and keep secrets of the principal that could cause unlawful trading of information or could be a detriment to the principal if shared. The principal needs to feel confident and comfortable in sharing company secrets with the agent without fear of any retribution or violation of that trust.

The agent must not pursue their own interests in the context of the agency relationship. In other words, they must look to the best interest of the principal at all times, even if there may arise a situation that would personally benefit the agent.

The agent has a responsibility and duty to perform at the highest level of skill and care available in the context of the agency and the agent's duties. If the agent has special knowledge or skill, then they must use it for the principal's benefit. The agent must exercise prudent business practices and conduct while representing the principal. Prudent business practices include exercising good judgment, keeping adequate records, putting deals in writing, and maintaining files with receipts and relevant paperwork. The agent must avoid any action that could cause reputational damage to the principal. The agent is not to compete with the principal, nor may the agent try to steal an opportunity or present the principal's ideas as their own.

If the agent learns of something important that the principal needs to know, then the agent has a duty to tell the principal. This standard applies even if the agent has handled the matter or resolved the conflict.

Ultimately, the agent has a duty to act within the scope and authority of the agency relationship. For example, if Tomeka is acting as an agent for the principal, Ms. Sanders, to enter into agreements for purchasing jewelry to sell at the store owned by Ms. Sanders, Tomeka would be acting outside the scope of her duties if she enters into agreements to purchase purses for the company. Actions outside the scope of the authority will harm the principal and can subject the agent to personal liability. It is the agent's duty to obey reasonable directions about the manner of performance. The principal is in control, and following the orders and industry or business practices is necessary for the success of the business. Therefore, the agent must act within those parameters to protect the agent, the principal, and the agency relationship.