Principal, Agent and Principal, Agent and Third PartiesThird Parties

Principal’s LiabilityPrincipal’s Liability

Principal is liable for contracts enteredPrincipal is liable for contracts entered

into by an agent acting with authority.into by an agent acting with authority.

Principal is liable for torts committed Principal is liable for torts committed byby

agent/ employee committed within theagent/ employee committed within the

scope of the employment/ agencyscope of the employment/ agency

relationshiprelationship

AGENTS AUTHORITYAGENTS AUTHORITY

Actual AuthorityActual Authority– ExpressExpress: Authority found in the: Authority found in the spoken spoken

or or written wordswritten words communicated to agent communicated to agent by principal.by principal.

– ImpliedImplied: : a. Authority which agent reasonably a. Authority which agent reasonably

infers the principal intends. infers the principal intends. b. The authority to do those things b. The authority to do those things

necessary to accomplish express necessary to accomplish express authority.authority.

AUTHORITYAUTHORITY

Apparent Authority: Apparent Authority:

Created by words or actions of Created by words or actions of principal causing third parties to principal causing third parties to believe agent has authority.believe agent has authority.

Principal’s and Agent’s Principal’s and Agent’s Liability to Third Parties Liability to Third Parties

(Contract)(Contract) Disclosed PrincipalDisclosed Principal: :

Third party knows they are Third party knows they are dealing with an agent and knows dealing with an agent and knows the identity of the principal.the identity of the principal.– Principal is liable. (Assuming agent Principal is liable. (Assuming agent

has authority)has authority)

– Agent is not liable. Agent is not liable.

Principal’s and Agent’s Principal’s and Agent’s Liability to Third Parties Liability to Third Parties

(Contract)(Contract) Partially Disclosed PrincipalPartially Disclosed Principal : :

Third party knows they are Third party knows they are dealing with an agent but does dealing with an agent but does not know the identity of the not know the identity of the principal.principal.

Principal and Agent both liable.Principal and Agent both liable.

Principal’s and Agent’s Principal’s and Agent’s Liability to Third Parties Liability to Third Parties (Contract)(Contract) Undisclosed PrincipleUndisclosed Principle::

Third party does not know they Third party does not know they are dealing with an agent.are dealing with an agent.

Both principal and agent are Both principal and agent are liable.liable.

LIABILITY TO THIRD LIABILITY TO THIRD PARTIESPARTIES

Tort liability (page 28)Tort liability (page 28)– Respondeat superiorRespondeat superior

Employer is liable for torts committed by Employer is liable for torts committed by employees employees

– if within the scope of their employment.if within the scope of their employment. Criteria for determining scope of employment:Criteria for determining scope of employment:

– Was the agent acting in the principal’s Was the agent acting in the principal’s interest?interest?

– Was the agent authorized to be in the Was the agent authorized to be in the particular place where the tort was particular place where the tort was committed?committed?

LIABILITY TO THIRD LIABILITY TO THIRD PARTIESPARTIES

Direct Liability for agent’s tortDirect Liability for agent’s tort

a. Principal directs agent to a. Principal directs agent to commit a commit a torttort

b. Principal’s negligence.b. Principal’s negligence.

Improper instructions, Improper instructions,

Careless supervision, Careless supervision,

Negligent hiring.Negligent hiring.

Liability for Liability for Independent Independent ContractorContractor

Principal is generally not liable forPrincipal is generally not liable for

actions of independent contractors.actions of independent contractors.

ExceptionsExceptions: (page 31): (page 31)

Negligent hiringNegligent hiring

Nondelegable dutyNondelegable duty

Highly dangerous activitiesHighly dangerous activities

Liability for Liability for Independent Independent ContractorContractor

Negligent hiring:Negligent hiring:

Hiring an incompetent independat Hiring an incompetent independat contractor.contractor.

Failing to properly hire, ie. Failure Failing to properly hire, ie. Failure to chek backgroundto chek background

Liability for Liability for Independent Independent ContractorContractor

Nondeligable duty:Nondeligable duty:– Carriers duty to transport passangersCarriers duty to transport passangers– Municipality’s duty to keep streets in Municipality’s duty to keep streets in

repairrepair– Railroads duty to maintain safe Railroads duty to maintain safe

crossingscrossings– Landlord’s duty to make proper Landlord’s duty to make proper

repairsrepairs

Liability for Liability for Independent Independent ContractorContractor

Highly dangerous activitiesHighly dangerous activities

ExcavationsExcavations

DemolitionDemolition

BlastingBlasting