RELATIONSHIP BETWEEN THE AGENT AND THE THIRD PARTY

three situations at common law where an agent may be personally liable to a third party

No Disclosure of Agency

-Where an agent does not disclose to a third party that they are acting as an agent, the agent may be held liable as if they were the principal.

-The injured party may choose to sue either the principal or the agent.

No Authority or Insufficient Authority

-An agent who makes a contract with a third party on behalf of the principal is presumed at law to have warranted or “guaranteed” that the agent has appropriate authority to do so.

-A third party can rely on this warranty.

-if an agent makes a contract with a third party on the principal’s behalf without having the authority to do so, the agent may be liable to the third party for damages for breach of warranty of authority.

Torts Committed by the Agent

-Tort: a private wrong or injury, other than breach of contract, for which the court will provide a remedy in the form of an action for damages

-Agents who commit torts against third parties cannot defend their actions by saying that the tort was committed on behalf of the principal or that the principal authorized the actions.

Principals are responsible for the actions of their agents

-if their agent commits a tort, that principal may also be liable to the third party

-The liability of a principal for an agent’s actions is so strict that, even if a principal instructs the agent to disclose relevant information to a third party, but the agent fails to do so, the principal may be held vicariously liable to the third party for any damages resulting from the agent’s misconduct.