What duty does a principal owe to agents?

• A. To reimburse the agent for unauthorized expenses incurred
• B. To indemnify the agent for liabilities incurred while the agent was acting for the principal within the scope of the agency
• C. To rely on the agent's accounts to determine agent compensation
• D. To provide a comfortable working environment

Answer: (B)

In agency law, the principal owes the agent indemnification for liabilities that arise from acts performed within the scope of the agency. Indemnification means the principal covers losses, damages, or liabilities the agent incurs because of actions the principal authorized or that are reasonably incidental to the agency. This protection lets the agent perform duties without risking personal financial harm from third‑party claims tied to those authorized acts. By contrast, reimbursing unauthorized expenses isn’t appropriate, since those costs aren’t within the agent’s authority. The other options either describe tasks not tied to legal liability protection or aren’t duties of this kind in relation to acts within the agency’s scope.