Agent and Principal Liability to Third Parties

Question 1

Agent’s Liability to Third Parties for Agent’s Conduct

Answer 1

Agents will always be liable to third parties for harm caused by their negligence or intentionally tortious conduct whether or not they are acting within the scope of the agency relationship. But K liability will depend on whether principal is fully or not fully disclosed.

Question 2

Agent’s K Liability for a Fully Disclosed Principal

Answer 2

In general, if an agent enters into a K on behalf of a fully disclosed principal, the agent will not be personally liable on the K.

Question 3

Additional Acts By Agent to Assume Personal Liability

Answer 3

• An agent is personally liable if they exceed the scope of their actual authority (this is an additional act to assume personal liability).
• But this does not apply when the principal is bound to the third party on the basis of the agent’s apparent authority.

Question 4

Agent’s K Liability for a Non-Fully Disclosed Principal

Answer 4

If an agent enters into a K on behalf of an partially disclosed (when existence but not identity is known) or undisclosed principal, the agent will be personally liable on the K along with the principal.

Question 5

Ways an Agent can Escape Personal K Liability

Answer 5

When they make clear to the third party that the agent is representing a principal and that the agent is not a party to the K.

Question 6

Agent’s Liability for Breach of Implied Warranty of Authority

Answer 6

Generally, if a person who purports to K with a third party on behalf of another has no power to act for the other, the person is liable to the third party for breach of implied warranty of authority.

Question 7

When the Implied Warranty of Authority Does Not Apply

Answer 7

When:

• the principal or purported principal ratifies the act; or
• the person who purports to make the K gives notice to the third party that no warranty of authority is given; or
• the third party knows that the person who purports to make the K is acting without actual authority
• when a principal is bound to a third party on the basis of an agent’s apparent authority

Question 8

Principal’s Tort Liability to a Third Party (for Employees)

Answer 8

Under the doctrine of respondeat superior an employer is vicariously liable for the torts of an employee where the tort is committed within the scope of employment. The employer and employee are jointly and severally liable.

Question 9

Scope of Employment

Answer 9

An employee acts within the scope of employment when performing tasks assigned by the employer or engaging in a course of conduct subject to the employer’s control.

Question 10

Factors for Determining if Something is Within Scope of Employment

Answer 10

Include:

• the extent to which the conduct is the kind of work the employee was hired to perform
• the extent to which the conduct occurred substantially within the time and space authorized by the employer; and
• the extent to which the conduct was intended to serve the interests of the employer
• remember frolic v. detour

Question 11

Frolic v. Detour

Answer 11

An employer will not be liable if the employee has substantially deviated from the authorized route (a frolic), but will be liable if the deviation is slight (a detour).

Question 12

Frolic v. Detour Factors

Answer 12

To determine the extent of deviation courts consider:

• the advancement of the employer’s interests
• whether the deviation occurred before or after the employer’s objective was served
• the scope of the deviation in terms of time and distance; and
• whether the deviation was in keeping with the type of employment

Question 13

Principal’s Liability for Employee’s Intentional Torts

Answer 13

Generally, employers will not be held liable unless tort is accomplished:

• in the course of doing the employer’s work; and
• for the purpose of accomplishing such work

Question 14

What if a Principal Instructs an Employee Not to Use Force in Duties?

Answer 14

This is no defense.

Question 15

Principal’s Liability for Independent Contractor’s Tortious Conduct

Answer 15

Principal is generally not liable unless:

• inherently dangerous activities
• nondelegable duties
• negligent selection of a K

Question 16

Liability for Independent Ks on an Apparent Authority Theory

Answer 16

A principal can be liable to a third person for torts committed by a non-employee agent when acts taken under an agent’s apparent authority constitute the tort.

Question 17

Negligent Selection/Supervision

Answer 17

A principal is liable to a third party for harm caused by the principal’s negligence in selecting, training, retaining, supervising, or otherwise controlling the agent

Question 18

Principal’s Tort Liability to a Third Party for Non-Employees

Answer 18

• A principal is generally not vicariously liable for torts of non-employees except:
• when a principal can be vicariously liable to a third party for torts committed by a non-employee agent where the agent acts with apparent authority

Question 19

Principal’s K Liability Arising from an Agent’s Actual Authority

Answer 19

Principals will be liable on Ks with third parties when their agents acting with actual authority enter into those Ks on their behalf. Principals will also be liable for Ks that they ratify.

Question 20

Undisclosed Principal’s K Liability Arising from Agent’s Actual Authority

Answer 20

Principal will be liable even if their identity is not disclosed. Therefore, if third party discovers the identity of the principal later on, they can bring suit.

Question 21

Principal’s K Liability Arising from an Agent’s Apparent Authority

Answer 21

• A party will be liable as if it were principal to an agent when the party’s words, actions, or failure to act causes a third party to reasonably but mistakenly believe that another acts as an authorized agent.
• Belief must be reasonable and traceable to a manifestation of the principal.

Question 22

When Liability Based on Apparent Authority Is More Likely to Apply?

Answer 22

Apparent Authority is more likely to come into play for K liability but not disputes involving tort liability. This makes sense because in the tort context, the injured party is not relying on the tortfeasor’s actual authority to act as principal’s agent.

Question 23

Watch Out for Double Dipping

Answer 23

When a third party knows of the identity of a principal, he must elect to go after either the agent or the principal, but not both.