In a complex commercial property transaction, an agent receives confidential financial information from the vendor and separately learns that the potential purchaser is facing financial difficulties. How should the agent handle this dual knowledge under fiduciary duty principles?
Correct Answer
A) Protect the vendor's confidences and warn the vendor about the purchaser's financial position
The agent owes fiduciary duties to the vendor: keep the vendor's confidential information from the purchaser, and tell the vendor about matters that affect the deal, such as doubts about the purchaser's ability to complete, so the vendor can seek a larger deposit, proof of finance or other protection. The agent owes the purchaser honesty, not fiduciary loyalty.
Why This Is the Correct Answer
A vendor's agent must keep the vendor's confidential information private and pass on anything material to the vendor. Doubts about the purchaser's ability to complete are material, so the vendor should be warned.
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