Which of the following best describes the responsibility of a principal in an agency relationship?

Which of the following best describes the responsibility of a principal in an agency relationship?

• A. To supervise the agent's every action
• B. To provide necessary information to the agent
• C. To handle all client communications
• D. To manage financial transactions

Answer: (B)

The responsibility of a principal in an agency relationship is best described by the necessity of providing the agent with all relevant and necessary information. This ensures that the agent can perform their duties effectively and represent the principal's interests adequately. By supplying necessary information, the principal enables the agent to make informed decisions and act competently on behalf of the principal. This collaborative approach is essential for the success of the agency relationship. In contrast, supervising every action of the agent is neither practical nor typically required, as agents are generally expected to perform their professional duties with a reasonable level of autonomy. While managing financial transactions can be a part of the role, it does not encompass the principal's broader responsibilities in an agency context. Similarly, handling all client communications often involves the agent directly, making it unrealistic for the principal to oversee all aspects of communication. Thus, the principal's primary obligation revolves around providing essential information, ensuring their agent is equipped to fulfill their role effectively.

The responsibility of a principal in an agency relationship is best described by the necessity of providing the agent with all relevant and necessary information. This ensures that the agent can perform their duties effectively and represent the principal's interests adequately. By supplying necessary information, the principal enables the agent to make informed decisions and act competently on behalf of the principal. This collaborative approach is essential for the success of the agency relationship.

In contrast, supervising every action of the agent is neither practical nor typically required, as agents are generally expected to perform their professional duties with a reasonable level of autonomy. While managing financial transactions can be a part of the role, it does not encompass the principal's broader responsibilities in an agency context. Similarly, handling all client communications often involves the agent directly, making it unrealistic for the principal to oversee all aspects of communication. Thus, the principal's primary obligation revolves around providing essential information, ensuring their agent is equipped to fulfill their role effectively.