What is the function of disclosure statements in agency relationships?

Disclosure statements play a vital role in agency relationships by providing transparency regarding the agents' role, the nature of the relationship, and any potential conflicts of interest. These statements help ensure that all parties involved are fully aware of the terms of the agency relationship, which fosters trust and clarity in the transaction.

By explicitly outlining the agent's responsibilities and any affiliations that may influence their judgment, these statements help both the principal and the third parties understand how the agent is expected to act and whether any outside interests might affect their decision-making. This transparency is crucial, as it allows for informed decision-making by all parties and reduces the likelihood of disputes.

The other options do not accurately capture the comprehensive purpose of disclosure statements. For example, while they do touch on legal obligations, limiting liability or serving as a marketing tool does not encompass the broader aim of fostering transparency and ethical conduct in agency relationships. Thus, focusing on the agents' roles and potential conflicts provides a critical foundation for effective communication and trust in business dealings.