Fiduciary Principles in Agency Law

This chapter identifies the fiduciary principles that are integral to agency relationships as defined by the common law and explores their implications. In contrast to relationships in which a fact-specific assessment of a relationship and its circumstances trigger the application of fiduciary duties, agency relationships are categorically treated as fiduciary. When a relationship of common-law agency links two persons, one person’s actions can directly carry legal significance for the other. Agency doctrine defines and imposes formal structure on consensual relationships in which one actor has legally consequential power to represent the other, encompassing externally oriented consequences for the principal, the agent, and third parties, as well as internally oriented rights and duties between agent and principal. An agent functions not as a substitute for the principal but as an extension of the principal’s legal personality in dealings with third parties and other externally oriented conduct within the scope of the agency relationship, including knowledge of facts acquired by the agent when material to the agent’s duties. The potentially grave impact for the principal, plus the implications for personal autonomy when one person represents another, underlie the requisites that define an agency relationship, including its fiduciary character.