Liability in Agency Relationships
Who Is Responsible?
A principal is generally bound by contracts entered into by an agent acting within actual or apparent authority. Principals may also be liable for certain wrongful acts committed by employees within the scope of employment.
- Authorized contracts generally bind the principal.
- Unauthorized acts may become binding through ratification.
- Employees acting within the scope of employment may create employer liability.
- Agents may be personally liable when acting without authority.
Note
The specific facts surrounding authority and employment determine liability.
Summary
Agency law allocates responsibility based on authority, representation, and the relationship between the parties.