How does a fiduciary relationship impact an agency relationship?

In the context of an agency relationship, a fiduciary relationship is one of trust and confidence where the agent holds a position of responsibility toward the principal. This means that the agent is legally and ethically obligated to act in the best interests of the principal at all times.

When a fiduciary duty is established in an agency relationship, it means that the agent must prioritize the principal's needs above their own and cannot engage in self-serving actions that conflict with the principal's interests. This foundational principle of fiduciary duty underscores the expectation that the agent will perform their role with the utmost loyalty and care, making decisions that benefit the principal and safeguarding the principal's assets and welfare.

This concept is essential in maintaining the integrity of the agency relationship, as it can lead to legal consequences if an agent fails to uphold their fiduciary obligations. The focus is on protecting the interests of the principal, ensuring that the agent does not exploit their position for personal gain.