The principal owes the agent the duties of
?Group of answer choices
compensation, reimbursement and indemnification
loyalty, provide information, and duty to obey
duty to account, duty not to receive a material benefit, duty to act with care and skill
providing a reference, a ride from a company picnic
The correct answer and explanation is:
The correct answer is:
compensation, reimbursement, and indemnification
Explanation:
In an agency relationship, the principal has certain duties to the agent. These duties ensure that the agent can effectively perform their role and be protected while carrying out tasks on behalf of the principal. The three key duties of the principal to the agent are:
- Compensation: The principal is required to compensate the agent for the work or services provided as per the agreement or contract. This compensation can be in the form of salary, commission, or other agreed-upon forms of payment. This duty ensures that the agent is financially rewarded for their efforts and contribution.
- Reimbursement: In the course of carrying out their duties, agents often incur expenses that are necessary to perform the assigned tasks (e.g., travel expenses, supplies, or other costs related to the agent’s duties). The principal is obligated to reimburse the agent for these expenses, provided that the expenses were reasonable and within the scope of the agency agreement.
- Indemnification: If an agent faces legal issues or losses while performing their duties within the scope of the agency, the principal has the responsibility to indemnify (or compensate) the agent. This means that the principal must protect the agent against any personal financial losses or legal liabilities that arise from carrying out the agent’s job. The principal assumes liability for the actions taken by the agent on their behalf, assuming the agent acted within the scope of authority.
These three duties—compensation, reimbursement, and indemnification—are essential for maintaining a fair and effective agency relationship. Without these duties, agents might be hesitant to act on behalf of the principal, fearing financial or legal harm. By ensuring that the agent is compensated for their work, reimbursed for expenses, and indemnified from harm, the principal fosters trust and collaboration in the agency relationship.