Which of the following statements concerning the law of agency is correct?

• A. The person receiving the agency authority is called the principal.
• B. Once an agent agrees to the agency relationship, the principal owes a fiduciary duty to the agent.
• C. An agent has a duty to act solely for the benefit of the principal.
• D. To arrange an agency relationship, a principal has to be a human being.

Answer: (C)

The central idea here is loyalty in an agency relationship: the agent must act solely for the benefit of the principal. That means the agent is expected to put the principal’s interests above personal gain, avoid conflicts of interest, avoid self-dealing, and disclose information that could affect the principal’s decisions. This duty of loyalty is the cornerstone of an agent’s responsibilities, so saying an agent must act exclusively for the principal’s benefit captures that fundamental obligation.

That’s why the statement is correct. The other assertions mix up roles or the direction of duties: the person who receives the authority is the agent, not the principal; fiduciary duties typically run from the agent to the principal (the agent owes loyalty to the principal), while the principal has other duties to the agent (like compensation and indemnification) but not a fiduciary duty to the agent; and a principal does not have to be a human being—corporations and other legal entities can act as principals.