National Real Estate Exam (PSI)General Principles of AgencyEasy
Which of the following is a duty owed by the principal TO the agent, rather than a fiduciary duty the agent owes to the principal?
- AReasonable care and skill
- BFull accounting of funds
- CConfidentiality
- DCompensation as agreed in the contract
Show answer & explanationAnswer & explanation
Correct answer: D. Compensation as agreed in the contract
While agents owe principals duties like confidentiality, care, and accounting (often summarized by OLDCAR), principals in turn owe agents duties such as paying agreed compensation and cooperating in good faith. Compensation flows from principal to agent, not the other way around.
Why the other options are wrong
- A. Care is one of the fiduciary duties owed by the agent to the principal.
- B. Accounting for funds and documents is a duty the agent owes the principal.
- C. Confidentiality is a duty the agent owes to the principal, not vice versa.
Principal's Duties to Agent
While agents owe fiduciary duties to principals, principals also owe agents duties such as compensation, cooperation, and reimbursement of expenses per the agreement.
- Compensation is typically set by the listing or buyer agreement
- Principal must cooperate and not hinder the agent's work
- Contrasts with OLDCAR duties owed by agent to principal
Memory trick: Agent gives OLDCAR, Principal gives pay