Contracts & Agency

Agency is a fiduciary relationship in which a principal (client) authorizes an agent to act on their behalf in dealings with third parties. The agent owes the principal fiduciary duties.

An agent owes the principal the fiduciary duties summarized as OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care/diligence.

Loyalty requires the agent to put the principal's interests above all others, including the agent's own. Self-dealing and undisclosed personal profit breach this duty.

The agent must keep the principal's confidential information (such as their lowest acceptable price or motivation) private, even after the agency ends, unless disclosure is legally required.

The duty of accounting requires the agent to safeguard and properly handle all money and documents belonging to the principal, depositing funds in a trust account and never commingling.

A special agent is hired for one specific task (most real estate agents). A general agent handles a range of duties (a property manager). A universal agent can act in all matters (power of attorney).