Which of the following statements about an agent's fiduciary duty is true?

Prepare for the Law of Agency Test. Delve into multiple choice questions featuring hints and explanations. Sharpen your understanding of agency law and gear up for success!

An agent's fiduciary duty inherently requires them to act in the best interests of their principal. This relationship is built on trust and emphasizes loyalty, care, and full disclosure. Prioritizing the principal's needs means that the agent must make decisions that benefit the principal above their own interests. This principle of loyalty is foundational to the law of agency, as it helps maintain the trust necessary for the principal-agent relationship to function properly.

In contrast, the other statements do not align with the fundamental principles of fiduciary duty. For example, the agent is expressly restricted from acting in their own interests when those interests conflict with those of the principal. Furthermore, the agent has a duty to keep the principal informed about all material actions taken on their behalf, ensuring transparency and accountability. Lastly, the ability to delegate responsibilities is also limited, as agents cannot freely transfer their duties without the principal's consent, given the personal nature of the agent's obligations. Thus, prioritizing the principal's needs is the central tenet of the fiduciary duty that agents must uphold.

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