Principal, Agent and Third Parties. Principal’s Liability Principal is liable for contracts entered into by an agent acting with authority. Principal.

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Presentation transcript:

Principal, Agent and Third Parties

Principal’s Liability Principal is liable for contracts entered into by an agent acting with authority. Principal is liable for torts committed by agent/ employee committed within the scope of the employment/ agency relationship

AGENTS AUTHORITY Actual Authority Actual Authority –Express: Authority found in the spoken or written words communicated to agent by principal. –Implied: a. Authority which agent reasonably infers the principal intends. b. The authority to do those things necessary to accomplish express authority.

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

Principal’s and Agent’s Liability to Third Parties (Contract) Disclosed Principal: Disclosed Principal: Third party knows they are dealing with an agent and knows the identity of the principal. –Principal is liable. (Assuming agent has authority) –Agent is not liable.

Principal’s and Agent’s Liability to Third Parties (Contract) Partially Disclosed Principal : Partially Disclosed Principal : Third party knows they are dealing with an agent but does not know the identity of the principal. Principal and Agent both liable. Principal and Agent both liable.

Principal’s and Agent’s Liability to Third Parties (Contract) Undisclosed Principle: Undisclosed Principle: Third party does not know they are dealing with an agent. Third party does not know they are dealing with an agent. Both principal and agent are liable. Both principal and agent are liable.

LIABILITY TO THIRD PARTIES Tort liability (page 28) Tort liability (page 28) –Respondeat superior Employer is liable for torts committed by employees Employer is liable for torts committed by employees – 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 interest? – Was the agent authorized to be in the particular place where the tort was committed?

LIABILITY TO THIRD PARTIES Direct Liability for agent’s tort a. Principal directs agent to commit a tort b. Principal’s negligence. Improper instructions, Careless supervision, Negligent hiring.

Liability for Independent Contractor Principal is generally not liable for actions of independent contractors. Exceptions: (page 31) Negligent hiring Nondelegable duty Highly dangerous activities

Liability for Independent Contractor Negligent hiring: Hiring an incompetent independat contractor. Failing to properly hire, ie. Failure to chek background

Liability for Independent Contractor Nondeligable duty: Nondeligable duty: –Carriers duty to transport passangers –Municipality’s duty to keep streets in repair –Railroads duty to maintain safe crossings –Landlord’s duty to make proper repairs

Liability for Independent Contractor Highly dangerous activities ExcavationsDemolitionBlasting