Common Law Fiduciary Duties Of An Agent.

[sting in the rafters]

Below are my Agency Law 321 notes on the fiduciary (e.g. legally obligated to act in best interest of another) duties of any agent. For y'allz sake, that mainly means employee. This applies for the Anglo-American jurisprudential system, aka common law. These may manifest in different tasks/responsibilities, however the core principles should be applicable in a variety of situations. Learn these well, hopefully they help someone cover their a__ as they have mine.

Feel free to ask questions, this is from two lectures of twenty so can provide context w/how it specifically relates to corporations.

Fiduciary Duties of Agent
       When an agent acts on behalf of principal, the principal is exposed to considerable loss.
       Requires agent to perform proper care, to be loyal, and vigilant
Duty of obedience
   In performance of principal, agent is required to perform exactly to principal’s
   requests/instructions, even if agent is acting in good faith. Except if it is an emergency
       After creation of agency, unforeseen event occurs.
       Event threatens substantial loss to principal if agent follows instructions
       Impractical for agent to communicate with principal in time to relay further instruction
Duty to inform
    Agent must keep the principal informed of all facts pertaining to agency so the principal can
     act properly with respect to this matter. Agent is liable if information does not reach the
     principal.
     Doctrine of imputed knowledge assumes agent informed principal of all knowledge
Duty of account
     Agent must keep accuracy of transactions, inventory, data, sales, shrinkage, etc.
Duty of loyalty
     Agent with power over someone’s interests is always subject to temptation for personal
     benefit . Agency may never be used for personal benefit except via principal’s consent.
        Law prohibits any and all acts where agent benefits from act of principal
        Agent derives a gain from business transacted on behalf the principal
     Agent must secure confidential info
        Trade secrets, patents, other intellectual property, etc.
      Agent cannot be on both sides of contract
        Agent who is negotiating contract for two different parties is not permitted to unless both
        parties consent to having the same agent; agent will forfeit his commission
     Agent cannot comingle assets with principal:Important for bankruptcy
Compensation
      Compensation is to be limited to amount agreed upon in contract between agent and
      principal
        Agent may not receive any further gain or benefit except upon request of principal
      Supposed to suppress the cost of goods so gifts do not eat into profit margin.
Consequences of shirking duties
      Agent’s liable for all damages and illegitimate duties resulting in torts
      Only an intentional breach of fiduciary duty warrants confiscation of compensation
Duties of Principal (Non-Fiduciary)
      Compensation
      Reimbursement of expenses incurred on behalf of principal
      Indemnify for agent’s losses incurred  on behalf of principal (e.g. car accident, worker’s
      compensations, etc.)
 DOES NOT APPLY FOR INDEPENDENT CONTRACTORS
       Person who hires independent contractors must be at arm’s length from transactions
Shop-right doctrine
       Employee during hours of employment, working with employer’s materials and appliances,
       perfects or creates an invention, their employer has a non-exclusive right to the
       improvement