Reference no: EM133190292

LO34-1: Under what circumstances might a principal be held liable to a third party on a contract negotiated by an agent?

LO34-2: Under what circumstances might a principal be held liable for the tortious behavior of its agent or independent contractor?

LO34-3: How can an agency relationship be terminated?

Authority of Agent and Liability of Principal
• Express authority: Principal explicitly instructed agent to perform act
• Implied authority: Relationship inferred from actions/conduct of parties; authority inferred from nature of relationship
• Apparent authority and estoppel: Third party reasonably believes (based on actions of principal) that agency relationship exists between principal and another individual

Liability of Principal and Agent for Authorized Agent Acts
• Authorized acts: Agent acts within scope of agent's authority
• Classification of principal: Must be classified as either disclosed, partially disclosed, or undisclosed
• Disclosed principal: Agent not liable, principal liable
• Partially disclosed principal: Agent possibly liable, principal liable
• Undisclosed principal: Agent liable, principal liable

Tort Liability and the Agency Relationship
• Agent's tortious conduct: Principal directly responsible if:
• Principal directs agent to commit tortious act
• Principal fails to provide proper instruments, tools, or adequate instructions
• Agent misrepresentation: If agent misrepresents himself/herself to third party, principal may be tortiously liable for agent's misrepresentation
• Respondeat superior: Principal/employer liable if employee wrongfully injures third party (not because he/she personally at fault, but because he/she negligently hired agent)

Questions Regarding Course and Scope of Employment
• Did employer authorize employee's act?
• Did act occur within time and space limits of employment?
• Was act performed (at least in part) on behalf of employer?
• To what extent were employer's interests advanced by act?
• To what extent were private interests of employee
involved?
• Did employer provide the means by which act occurred?
• Did employee use force that employer did not expect?
• Did employer know that act would involve commission of crime?

Crime and Agency Relationships
• If agent commits crime, agent liable for crime
• If agent commits crime in scope of employment without authorization of principal, principal not liable for agent's crime
• Principal liable for agent's crime if principal authorized agent's criminal act

Termination of Agency Relationship
• Termination by acts of parties
• Lapse of time
• Fulfillment of purpose
• Occurrence of specific event
• Mutual agreement
• Revocation of authority
• Renunciation by agent