What is the "duty of loyalty" in Maryland agency relationships?

The "duty of loyalty" in Maryland agency relationships is a fundamental principle that mandates agents to prioritize the principal's interests above their own. This duty is essential in ensuring that agents act in a manner that is consistent with the best interests of their principals, thereby fostering trust and integrity in the agency relationship.

When an agent undertakes the responsibility to act on behalf of the principal, they are expected to refrain from any actions that could potentially harm the principal's interests, even if doing so could benefit the agent personally. This duty encompasses various aspects, such as avoiding conflicts of interest, not competing with the principal, and not misappropriating the principal’s resources or opportunities.

Understanding this duty is crucial for maintaining ethical standards and legal compliance within agency relationships. It is the foundation upon which the trust between an agent and a principal is built, as it ensures that agents place the needs and objectives of their principals at the forefront of their decision-making.