Weekly Learning Objective: Learner will review the elements of the relationship between agent principal.

Using the Blog Rubric listed below for the specific grading criteria, complete the following:

It is often said the concept of “fiduciary” is at the heart of agency law. Research and define what it means to be a “fiduciary” or to possess a “fiduciary duty.” Identify and describe the five duties an agent is said to owe his principal. Give an example where you have seen or experienced the concept of a fiduciary relationship in your own personal or business lives. Have you have been involved in a situation where you felt a fiduciary duty had been breached? Were you correct, and if so, why?

Agency Law – Fiduciary

It is often said the concept of “fiduciary” is at the heart of agency law. Research and define what it means to be a “fiduciary” or to possess a “fiduciary duty.” 

              In my opinion, the person representing you should have your best interest at heart without any malicious intent. A fiduciary does just that. Being able to have that trust back and forth between the agent and the principal allows you to continue to do business in good faith. The agent must never put their self-interest ahead of the principal or that of a third party that is at the expense of those parties. According to DeMott (2014) “A principal’s power to furnish instructions to the agent is the fundamental mechanism through which the principal exercises control over the agent, a requisite for an agency relationship. The agent’s fiduciary duty to the principal provides a benchmark for the agent’s interpretation of those instructions”. The agent works in your best interest and works as an extension of the principal.

Identify and describe the five duties an agent is said to owe his principal. 

              The range of agent’s duties can vary and are defined by the terms of the agreement between the agent and the principal, the fiduciary responsibilities to the principal, and the level of the authority that is authorized. The first and foremost responsibility of the agent is to act on behalf of and be under the control of the principal to function. This is also sometimes referred to as duty of care. This involves acting in good faith on behalf of the principal, being honest and reasonably completing assigned duties. According to Khedmati (2020) “Duty of care requires directors to act on an informed basis upon consideration of relevant information reasonably available to them. If a director fulfills these fiduciary duties, she can benefit from the protections afforded by the business judgment rule—that is, she will be shielded from personal liability for decisions that she makes in her capacity as a member of the board”. The second duty is the duty of loyalty that agents must show to their principal. Each decision should be made with the principal in mind, and the agent is responsible to put the interests of the principal ahead of their own. The third duty is the duty of confidentiality that the agent must undertake on behalf of the principal. Information that is not public cannot be shared without permission from the principal. The duty of accounting is the fourth duty of an agent where the right accounting methods should be used to keep tabs on all of the financial transactions for the principal. Everything needs to be accounted for and the agent has the responsibility to make sure all the transactions are lawful. The duty of obedience is the fifth duty of an agent and ensures that the fiduciary acts in accordance with guidelines set by the principal. 

Give an example where you have seen or experienced the concept of a fiduciary relationship in your own personal or business lives.

              A financial advisor can be an example of a fiduciary relationship in a company. They have the best interest at heart of the company. They do not benefit from the advice that they give and are putting the company first. This can differ from a personal financial advisor. You can ask your financial advisor if they are a fiduciary. This will tell you if they are selling you products for their book of business in order to get products sold, or if they are genuinely putting your concerns first and making sure you have the adequate coverage to reach your financial goals through the best products available to you with the best strategies that work for your life scenario. 

Have you have been involved in a situation where you felt a fiduciary duty had been breached? Were you correct, and if so, why?

Yes, I have been in a situation where I felt a fiduciary duty had been breached. I was correct as a matter of fact, and I confirmed this through the legal counsel of the company I was working with at the time. Without going into specific details, I can say the fiduciary duty was breached because the individual was not working in my best interest. The agent put their interests ahead of mine as a principal and sought to benefit where I would have suffered damage along with the third-party company that the agent was supposed to work with in this case.

References

DeMott, D. (2014). The Fiduciary Character of Agency and the Interpretation of Instructions. Duke University Law. Retrieved April 3, 2022, from https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=5839&context=faculty_scholarship#:~:text=A%20principal’s%20power%20to%20furnish,agent’s%20interpretation%20of%20those%20instructions.

Khedmati, A. (2020, October 27). Fiduciary Duties in a Stakeholder Model of Corporate Governance. Fordham Journal of Corporate & Financial Law. Retrieved April 3, 2022, from 

Support your thoughts using a minimum of two academic, peer-reviewed sources (outside the textbook). Websites such as Wikipedia, LegalZoom, LegalMatch, Nolo, etc. do NOT count as academic sources. A good place to start is the Davenport University Library. Substantial blog entries should contain at least 1200 words. Peer response blog comments should contain at least 350 words.