What is "self-dealing" in an agency context?

In the context of agency law, "self-dealing" refers specifically to situations where an agent takes actions that benefit themselves personally in a transaction that involves their principal. This behavior is problematic because it creates a conflict of interest, where the agent prioritizes their own gain over the best interests of the principal. An agent has a fiduciary duty to act loyally and in good faith on behalf of the principal, which means avoiding circumstances that would lead to self-gain when representing the interests of the principal.

For example, if an agent is involved in negotiating a contract in which they stand to gain a commission or other benefits, this would be considered self-dealing if the agent does not fully disclose this interest to the principal. The principal may be led to believe the agent is acting solely in their best interest, when in fact, the agent is motivated by personal benefit.

The other options do not accurately define self-dealing or represent actions that fall outside its definition. They either address the conditions under which the agent acts or imply appropriate conduct, which does not encompass the essence of self-dealing as a breach of fiduciary duty.