In agency, a customer is a party for whom the broker owes what kind of duties?

• A. A client receives full fiduciary duties.
• B. A customer is someone for whom the broker owes only limited duties, not full fiduciary duties.
• C. A customer is always represented by the broker in a fiduciary capacity.
• D. A customer is not involved in the transaction.

Answer: (B)

In agency, who the broker represents changes the level of duties. A client has an agency agreement, so the broker owes full fiduciary duties—loyalty, obedience, confidentiality, disclosure, accounting, and skill and care. A customer, however, hasn’t entered into that agency relationship, so the broker owes only limited duties—being honest and fair, avoiding misrepresentation, and not misleading the customer. The broker isn’t obligated to act in the customer’s best interests with the same loyalty or protect confidential information of another party unless it benefits the transaction. Because of that distinction, a customer is someone for whom the broker owes only limited duties, not full fiduciary duties.