Chapter 14 notes Sunday, July 03, 2016Sunday, July 03, 2016Sunday, July 03, 2016Sunday, July 03, 2016

Fiduciary relationship ► A relationship based on trust.

Five fiduciary duties ► The agent owes the principal: 1. Obedience = to all reasonable commands 2. Good faith = no intent to seek a personal advantage.

Five fiduciary duties 3. Loyalty = not working for the competitor or themselves at the same time.  Double representation = dealing for both the principal and his competitor at the same time.  Self-dealing = agents benefit themselves from the transactions for the principal. 4. Duty to Account = accounting: handling all money and recording it accurately to the cent.

Five fiduciary duties 5. Judgment = making wise decisions.

Principal duties to Agent 1. Compensation = pay them fairly for their work. 2. Reimbursement = if the agent spends money on the principal’s behalf, the principal needs to pay it back.

Principal duties to Agent 3. Indemnification = if the principal’s instructions cause a financial loss to the agent, the principal needs to pay for it. 4. Cooperation = principal cannot interfere with the agent’s ability to do his job.

Termination by operation of law ► Death of the agent. ► Bankruptcy of the principal. ► If the subject matter is destroyed. ► Agent or principal become too ill.

Termination by acts of parties ► Both agent and principal fully carry out their duties. ► Mutual agreement. ► Agent withdrawals (principal can sue if it’s a breach of contract). ► Principal fires the agent (not always possible).