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All agency agreements confer obligations upon both their principal and agent.

Agents’ obligations

Agents usually owe three types of obligations to their principals: performance obligations, fiduciary obligations and, if the agent is a commercial agent, commercial agent obligations.

Performance obligations

The common law has little to say about what an agent must and must not do; an agent’s performance obligation, sometimes called his positive obligation is simply to perform his mandate under the agency agreement. The common law only appears to intervene if the agreement does not provide for a standard of care which the agent must meet: if none is specified, the agent must act with reasonable care for skills which they profess to have, according to The Moonacre [1992].

Fiduciary obligations

Equity has much more to say about agents’ obligations, imposing fiduciary, or negative, obligations. Two obligations are imposed: avoid conflicts of interest and don’t take advantage of a privileged position. In Bristol & West Building Society v Mothew [1998], Lord Millet explained that fiduciary obligations arise because a principal exposes himself to his agent, creating a relationship of trust and confidence. An agent who is incompetent does not breach these obligations, only an agent who is unfaithful. Regal Hastings v Gulliver [1967] shows that even when acting with a good motive, utilising a privileged position for personal gain will usually be classed as a breach of fiduciary obligations.

Consent

If there is consent to a breach of fiduciary obligation, the breach will not be actionable by the principal...

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