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Which duty requires an agent to keep the principal informed of all material facts?

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Question & Answer

Review the question and all answer choices

A

Loyalty

Loyalty is the duty to put the principal's interests above all others, to avoid conflicts of interest, and to not accept commissions from more than one party in a single transaction. It does not specifically address the requirement to inform the principal of material facts.

B

Obedience

Obedience is the duty to follow the principal's lawful instructions. While it involves communication between agent and principal, it focuses on following directions rather than proactively disclosing material facts that could impact the transaction.

C

Disclosure

Correct Answer
D

Accounting

Accounting is the duty to properly handle all funds belonging to the principal, including keeping accurate records and turning over all money and property. This duty relates to financial transactions, not the disclosure of material facts about the property or transaction.

Why is this correct?

The duty of disclosure specifically requires an agent to keep the principal informed of all material facts that could affect the transaction. This is a distinct fiduciary duty separate from loyalty, obedience, or accounting, and directly addresses the communication of important information between agent and principal.

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