when an agent acts on behalf of a principal the agent may receive information it would be able to personally capitalize on for personal benefit for example an agent may receive information relating to a potential investment opportunity the agent owes the principal the duty to not steal or supplant the principal s ability to transact in this example the principal retains the right to decide whether or not to invest the agent must not take the place of the principal without the principal explicitly declining an opportunity to invest 
on a similar note an agent may not enter into transactions or business that compete with a principal this conflict of interest puts the principal at a disadvantage as the agent may obtain trade or business secrets during the course of the business relationship for example imagine if an agent was tasked with shipping specific goods to an agent s manufacturing warehouse the agent could obtain information related to the principal s operations that the agent could then use for its personal benefit formalized agent principal arrangements often include verbiage that the agent must disclose if it has any other principals in which it is acting as an agent for this includes disclosing a sworn statement that the agent will act in good faith across all principals and will incur fair dealing with each principal during the course of an agent s relationship with the principal the agent may not disclose confidential information to unrelated parties this may defined through confidentiality agreements or may not be explicitly called out in either case the agent must take care to evaluate the sensitivity of information and the necessity for other parties to obtain that information this includes not using confidential information for the personal benefit of the agent i e exchanging the information for personal benefit to an independent third party an agent may have express authority via a written contract or implied authority entered into agreement based on actions performance responsibilities of an agentall terms of any written agreement between an agent and a principal define the relationship between the two for many agent and principal relationships the contract is not explicitly defined upfront however custom or deliberate agreements may call for very specific terms that define what is and isn t allowed an agent is always tasked with acting with care and competence when handling affairs of the principal the standard is often held that the agent must act as the principal would using discretion as if it would incurring the personal gain or loss though the level of care may not be explicitly defined the level of care should be equal to what is reasonably expected by local standards the duty of care may be complicated when considering the agent s personal benefit potential for example consider a broker that receives a commission for the sale of certain investment products for some clients it may not be in their best interest to buy those investments therefore the broker has the duty of care to not sell such products to those individuals sacrificing personal gain to uphold the sanctity of the relationship an agent must comply with reasonable instruction though there may be situations where acting on one s behalf and following their guidance is not reasonable or legal the agent may have recourse to not follow instruction otherwise the agent is bound to perform tasks as expected by the agreement this includes situations where the principal may be disadvantaged but has instructed the agent to act in a specific manner as the agent gains sensitive information that may influence the decision making process of a principal the agent has the duty to disclose that information in an accurate timely manner consider the example of los angeles dodgers player freddie freeman freeman s agent reportedly did not disclose to freeman that his former team the atlanta braves wanted to re sign him by withholding such information freeman reluctantly signed with a different team 1an agent also has the responsibility to keep the agent s and the principal s affairs separate this includes ensuring that any transactions entered into on behalf of the principal are still legal property of the principal this also ensures that any resources or capital used to transact are maintained in separate bank accounts and that separate reporting ledgers are maintained 