MBE Rules · Business Associations
Agent's Fiduciary Duties
Agent fiduciary duties
The rule
Agents owe loyalty (no self-dealing, secret profits, or dual agency without consent), obedience, and care; a disloyal agent disgorges profits regardless of harm to the principal.
In plain English
Agents have a duty to act in the best interests of their principals, which includes being loyal, following instructions, and exercising care in their actions. If an agent acts disloyally, they must return any profits made from that disloyalty, even if the principal wasn't harmed by the agent's actions.
Worked example
An agent for a real estate company secretly sells a property to a friend at a lower price without informing the principal. The agent profits from the sale while the principal is unaware of the transaction. Because the agent acted disloyally, they must return the profits made from the sale to the principal.
Memory hook
Loyalty first, profits last—agents must put their principals first.
The trap
Exams may present scenarios where an agent's actions seem beneficial to the principal, leading students to overlook the disloyalty involved.
How examiners test it
Questions often involve fact patterns where an agent's dual role or secret profit is tested, requiring candidates to identify breaches of fiduciary duty.
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