Also known as: dual agency doctrine · dual agency
Written by attorneys — see sources below.
An agency principle that requires an agent who represents two principals in the same transaction with their knowledge to act with fairness toward each and to disclose all facts the agent knows or should know would reasonably affect either principal's judgment about permitting the dual representation.
Darius Dixon listed his commercial building for sale through broker Lena. Deanna Davenport retained the same broker to locate and acquire suitable property. Lena held an undisclosed option to acquire an equity stake in Deanna's company after closing and knew of a recent appraisal substantially above the contract price. When Darius later discovered both facts, he sued Lena for breach of her duties as dual agent.
Derek Douglas, an independent reinsurance broker, arranged a quota-share treaty between Dixon Foods' captive insurer and Drake Logistics' reinsurer. Both insurers knew Derek acted for each side. Derek held an undisclosed override commission from Drake that increased if Drake accepted higher limits. After Dixon suffered large losses under the treaty, it sued Derek for breach of duty arising from the dual representation.
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View caseA dual agent must disclose all facts the agent knows or should know would reasonably affect each principal's judgment about permitting the dual representation or about the terms of the transaction. This includes compensation arrangements that create incentives to favor one principal and material pricing or appraisal information.
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No. Consent to the dual role satisfies only the threshold requirement that both principals know of the representation. The agent must still disclose specific material facts unless a principal has manifested that it already knows those facts or does not care to know them.
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No. A generic statement fails to satisfy the duty when the agent knows specific facts, such as differing fee concessions or contingent compensation structures, that would reasonably affect a principal's judgment about the fairness of the arrangement.
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The duty does not apply when a principal has manifested that it already knows the facts or does not care to know them. A general dual-agency acknowledgment form addressing only abstract risks does not satisfy this exception for specific material facts.
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