What does the duty of loyalty require from the agent?

The duty of loyalty requires that an agent prioritize the interests of the principal above all else. This duty is a fundamental principle in agency law and ensures that the agent acts in good faith and with the utmost integrity in their relationship with the principal. By putting the principal's interests first, the agent avoids conflicts of interest and is expected to act only in ways that benefit the principal.

For instance, if an agent has the opportunity to make a profit from a transaction that could also benefit the principal, they should disclose that opportunity to the principal and allow the principal to decide how to proceed. This approach protects the principal and ensures that the agent does not engage in self-serving behaviors that could undermine the trust inherent in the agency relationship.

This duty is integral to the agent's role, as it fosters a cooperative and transparent relationship that is beneficial to both parties. Failure to adhere to this duty can result in legal repercussions for the agent, including the potential for the principal to seek damages for any losses incurred due to the agent's conflicting actions.