Which duty requires the agent to act for the principal's benefit, avoiding self-dealing and competition?

• A. Duty of loyalty
• B. Duty of care
• C. Pass-through taxation
• D. Estoppel

Answer: (A)

The duty of loyalty requires an agent to act for the principal’s benefit, avoiding self-dealing and competition. An agent must put the principal’s interests ahead of their own, disclose any conflicts, and refrain from taking opportunities that should belong to the principal or from competing with the principal while representing them. If a potential deal could benefit the agent personally, the agent should present it to the principal or obtain consent before proceeding. This duty protects the principal from personal gain at the principal’s expense and from agents using confidential information for their own advantage.

Duty of care, by contrast, focuses on the agent’s competence and diligence—using reasonable skill and care in performing tasks—rather than on conflicts of interest or competing interests. Estoppel is a doctrine that prevents someone from taking a contrary position because of their previous actions or statements. Pass-through taxation is a tax treatment rather than a fiduciary duty.