What does fiduciary refer to in an agency relationship?

In an agency relationship, a fiduciary refers to an individual who is entrusted to act on behalf of another party, typically in a manner that prioritizes the interests and welfare of the principal. This term encompasses the duties of loyalty, care, and full disclosure that the agent owes to the principal. The agent is expected to put the principal's interests ahead of their own, maintaining a trust-based relationship which is foundational in the realm of agency law.

Understanding fiduciary duty is crucial because it defines the expectations and responsibilities that come with the role of the agent. This concept tends to emphasize the high standard of conduct required of agents, highlighting the importance of acting in good faith and maintaining transparency with the principal. The other choices do not encapsulate this fundamental aspect of agency relationships as precisely. They pertain to different legal concepts or arrangements, lacking the key element of trust and representation inherent in fiduciary relationships.