Business Law Basics

1. Fiduciary Duties in the Context of the Business Relationships and Entities we have Studied.

Fiduciary duties lie with the directors, owners or officers who are trusted to make good and sound judgments on behalf of their company and that they will make them with the companies best interests at stake. In a Principal-Agent relationship, the Agent acts on behalf of the Principal usually carrying out activities and tasks set forth by the Principal, but it is the agents fiduciary duty to act in best interest of what the Principals needs are. Principal- Agent relationships work off the idea of respondeat-superior in which the employer should answer to the employees acts within he scope of employment. The principal assumes all the risk and liability while the agent merely acts as an interim between themselves and the third party. The Agent is held under the Duty of Loyalty, in which they are to act without economic benefit from which can be breached if they make a self-interested transaction not in the good faith of the Principal. In the case of Tarnowski v. Resop the Agent was instructed to buy a business of coin-operated music machines on behalf of the Principal. After completing a superficial investigation, the Agent took then world of the seller in that they owned over 75 locations, all of which were within only 6 months old and brought in income of over $3,000 per month. The Agent accepted the deal and put down $11,000 of the Principals money and had received a personal commission from the sale. He soon came to find that there were only about 47 locations, in which the machines were up to even 7 years old and the monthly income was far less than the $3,000. The Principal went on to bring action against the Agent, for he acted outside of his fiduciary duties and shown negligence by not properly doing his research before buying the machines, and also earning commission off of the sale in which the Principals money was used to purchase. “The general rule is stated...