Hadi's Car Purchase Predicament
What legal issue arises from Hadi's car purchase from Devon?
Which of the following statements is most likely to be TRUE?
Select one:
A. Devon breached his fiduciary duty because his personal interests conflicted with Hadi's
B. Devon will not be held liable because he fulfilled his obligations as an agent when facilitated Hadi's purchase of the yellow car
C. Devon breached his duty of care because he failed to demand a lower price from Nadia
D. Devon breached his duty of care because he failed to recognize the problem with the car
E. Devon will not be held liable because he paid a fair price to Nadia for the two cars
Answer:
Devon breached his fiduciary duty because his personal interests conflicted with Hadi's is most likely to be TRUE. A fiduciary duty is an obligation to act in the best interests of another person, arising out of a relationship of trust and confidence.
An individual acting as an agent owes a fiduciary duty to his or her principal, which includes a duty of loyalty, good faith, and avoidance of conflicts of interest. Devon agreed, in exchange for $250, to search the marketplace and obtain a suitable car for Hadi. He found two Honda Civics, and while the blue one was in excellent shape and was perfect for Hadi, the yellow one needed a complete engine replacement. After keeping the blue car for himself, Devon transferred the yellow car to Hadi in exchange for $20,000.
Devon breached his fiduciary duty because his personal interests conflicted with Hadi's, is most likely to be true because Devon was an experienced mechanic who was paid to find a vehicle for Hadi, but instead bought two cars and kept the better one for himself while selling Hadi a car that required significant work to become roadworthy, all while claiming it was worth $20,000, which was supposedly a fair price.
Further Explanation:
A fiduciary duty is a legal or ethical relationship of trust between two or more parties. In this case, Devon had a fiduciary duty to act in Hadi's best interests when purchasing a car on his behalf. By keeping the superior blue Civic for himself and selling Hadi the problematic yellow Civic at an allegedly inflated price, Devon violated this duty.
As an experienced mechanic, Devon should have recognized the issues with the yellow car and either negotiated a lower price with Nadia or informed Hadi of the necessary repairs before completing the transaction. Instead, Devon's actions prioritized his own interests over Hadi's, breaching the fiduciary duty he owed to Hadi.
In legal terms, Devon's actions can be interpreted as a breach of fiduciary duty due to the conflict of interest between his role as Hadi's agent and his personal gain from keeping the better car. As a result, Hadi has grounds to pursue legal action against Devon for this breach.