What does the term "fiduciary duty" imply in an agency relationship?

The term "fiduciary duty" in an agency relationship signifies that the agent is obligated to act in the best interest of the principal. This fundamental principle emphasizes trust and reliance—agents must prioritize the principal’s interests above their own and exercise loyalty, care, and full disclosure while carrying out their duties. This duty ensures that the actions taken by the agent reflect what is most beneficial for the principal, maintaining the integrity of the relationship.

In an agency context, this means that any decision, action, or advice given by the agent must be aligned with the principal's goals and welfare. It creates a bond of trust where the principal relies on the agent’s expertise and integrity. Understanding this duty is critical, as it lays the groundwork for ethical behavior and responsibilities within any agency relationship.