What is a potential action that would breach the duty of loyalty?

The duty of loyalty is a fundamental principle in agency law that requires an agent to act in the best interests of the principal. This duty prohibits the agent from engaging in activities that could create a conflict of interest or lead to self-dealing.

Seeking benefits from a third party while representing the principal constitutes a breach of the duty of loyalty because it indicates that the agent is prioritizing their own interests over those of the principal. In this scenario, the agent may be compromising their ability to fulfill their responsibilities effectively, potentially resulting in financial loss or other disadvantages for the principal.

In contrast, following the principal’s instructions, communicating openly with them, and adhering strictly to the agency agreement are all actions that reinforce the agent's obligation to act in the principal's best interests. These actions align with the expectations of the agency relationship and support transparency and trust between the agent and the principal.