Specific Liability of Principal to Third Parties

Question 1

Common agency fact pattern

Answer 1

1. Activity arguably creating an agency relationship
2. Agent enters a contract binding the Principal or committing a tort
3. Principal being sued by a third party because of what agent did

Question 2

When is a principal liable for contracts that an agent enters on behalf of the principal?

Answer 2

The principal is bound on a contract when:

1. The principal authorizes the agent to enter into the contract; and
2. The agent acted with legal authority

Question 3

Four types of legal authority

Answer 3

1. Actual express authority
2. Actual implied authority
3. Apparent authority
4. Ratification