What is an essential duty of an agent towards a principal?

An essential duty of an agent towards a principal is to act in good faith and disclose material facts. This duty is rooted in the fiduciary relationship between the agent and the principal. Fiduciary duties require the agent to prioritize the interests of the principal above their own and to provide transparency regarding any information that could affect the principal’s decisions or interests.

Good faith entails honesty and fair dealing, ensuring that the agent does not take advantage of their position or mislead the principal. Disclosing material facts is critical because it helps the principal make informed decisions. For instance, if there are risks or opportunities that could significantly impact the principal’s objectives, the agent has a duty to bring those to the principal's attention.

This duty contrasts sharply with the other options. Keeping all transactions confidential may not always align with the best interest of the principal, particularly if disclosure is necessary for informed decision-making. Minimizing communication with the principal could obstruct the flow of important information and negatively affect the principal’s ability to act on critical matters. Handling all disputes personally is impractical, as agents may need to communicate with the principal about disputes rather than tackling them alone. Therefore, the duty to act in good faith and disclose material facts is fundamental to the relationship between agent and principal