The Principal-Agent Relationship

An agency relationship is often formed upon the signing of a contract. Both the agent and the principal have specific powers and certain duties they must fulfill. It is important to understand when this relationship begins and ends, and how to recognize when an agent could potentially breach his or her fiduciary duty. I am currently having the roof replaced on my house by a small employee-owned company. The roofer wrote up a contract and upon signing, out agency relationship was created. The contract details exactly what duties he will perform on my roof replacement and exactly what my obligations are in terms of payment amounts and due dates. The signed contract resulted in actual, express authority for the agent to act upon the terms of the contract. While the

The original principal-agent relationship still stands, regardless of how the agent chooses to fulfill his duties under the contract. Because the roofing company is relatively small, the issue of subagents is not a concern. Because the agent has a fiduciary duty to act in my best interest under the agency relationship, he must act accordingly so he does not risk breaching our contract. The agent has a duty of loyalty to the principal and must avoid conflicts of interest and must also be careful not to disclose any confidential information received from me. The roofer as the agent must also act with the same care, competence and diligence as another agent would under similar circumstances. Once the roof replacement is completed as outlined in the contract, the agency relationship is terminated. This termination is clear and concise because the specified objective was stated in the contract. If the specific objective was not completed the contract could still be terminated either by mutual agreement or at the option of either