Tennessee affiliate broker Carlos represents the Fosters in purchasing a commercial property. After the contract is signed, Carlos discovers that the seller's broker is a personal friend and that the seller's broker has been sharing the Fosters' confidential negotiating information with the seller throughout the transaction. Carlos does not inform the Fosters and continues to work with the seller's broker to close the deal. Which fiduciary duty has Carlos most seriously violated?
Correct Answer
C) Loyalty, because Carlos continued working with a broker who harmed his clients rather than protecting their interests
Under Tenn. Code Ann. § 62-13-401 et seq., the duty of loyalty requires Carlos to place the Fosters' interests above all others, including his personal friendship with the seller's broker. By continuing to work with a broker he knows has been leaking his clients' confidential information — and by failing to inform the Fosters — Carlos has chosen his personal relationship over his clients' interests. This is a direct and serious breach of loyalty.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created by a clear, explicit agreement between the principal and agent, either orally or in writing.
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
An agency relationship where the agent agrees to act on behalf of the principal without receiving compensation.
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