What is the duty to disclose material information to the principal?

• A. Disclosures are optional if the principal is familiar with the transaction.
• B. Disclosures are only required for legal requirements, not strategic decisions.
• C. The agent should share all information, including confidential internal analyses, without restriction.
• D. The agent must disclose information material to the principal's decisions and actions.

Answer: (D)

In agency law, a fiduciary must disclose information that is material to the principal’s decisions and actions. The principal relies on the agent’s knowledge and representations to decide whether to proceed, negotiate, or take a particular course, so the agent has a duty to reveal information that would influence that decision. This means sharing facts, risks, and insights that a reasonable person would consider important, especially if the principal wouldn’t have access to them on their own.

Disclosures aren’t unlimited; they must be information that could affect the principal’s choices. Information that is purely confidential or not material to the decision isn’t necessarily required to be shared, and confidentiality constraints may limit disclosure. However, withholding information that would influence a reasonable decision breaches the fiduciary duty. That’s why the best answer is that the agent must disclose information material to the principal’s decisions and actions.