Which of the following describes the relationship between the agent and the principal?

The agent-principal relationship is best described as a fiduciary relationship. In this context, fiduciary means that the agent has a legal and ethical obligation to act in the best interests of the principal. This involves a duty of loyalty, care, and full disclosure, where the agent must prioritize the principal's interests above their own.

In a fiduciary relationship, the agent is entrusted with certain powers or responsibilities to act on behalf of the principal, which can include making decisions, entering into contracts, or managing assets. This level of trust and responsibility is fundamental to the role of an agent and distinguishes it from other types of relationships.

For example, in a business context, when an insurance agent sells policies on behalf of an insurance company (the principal), the agent must ensure that they provide accurate and beneficial information to clients, adhering to ethical standards to promote the best interests of both the clients and the insurance company. Thus, a fiduciary relationship encompasses the trust and reliance inherent in the agent-principal dynamic.