What fiduciary duty does a principal violate when refusing to pay an agent for authorized expenses incurred on behalf of the principal?

The correct answer is the duty to reimburse and indemnify. This fiduciary duty requires the principal to compensate the agent for expenses that the agent has incurred while carrying out authorized tasks on the principal's behalf. When an agent acts within the scope of their authority, they should not be financially penalized for necessary expenses incurred in the execution of their duties.

In this scenario, if the principal refuses to repay the agent for these authorized expenses, it suggests a breach of this specific obligation. The remedy of reimbursement underlines the trust and reliance inherent in the principal-agent relationship, where the agent is expected to act in the best interests of the principal while also being protected from undue financial burdens that arise from performing their role.

Understanding this duty emphasizes the necessity for principals to act in good faith toward their agents, ensuring that agents feel secure in their role and incentivized to act effectively. This reinforces trust and cooperation within the agency relationship, ultimately benefiting the principal as well.