Principal, Agent and Third Parties

1
Principal, Agent and Third Parties
2
Principals 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

3
AGENTS 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.

4
AUTHORITY

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

5
Principals and Agents Liability to Third
Parties (Contract)

• 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.

6
Principals and Agents Liability to Third
Parties (Contract)

• 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.

7
Principals and Agents Liability to Third
Parties (Contract)

• Undisclosed Principle
• Third party does not know they are dealing
  with an agent.
• Both principal and agent are liable.

8
LIABILITY TO THIRD PARTIES

• Tort liability (page 28)
• Respondeat superior
• Employer is liable for torts committed by
  employees
• if within the scope of their employment.
• Criteria for determining scope of employment
• Was the agent acting in the principals interest?
• Was the agent authorized to be in the particular
  place where the tort was committed?

9
LIABILITY TO THIRD PARTIES

• Direct Liability for agents tort
• a. Principal directs agent to commit a tort
• b. Principals negligence.
• Improper instructions,
• Careless supervision,
• Negligent hiring.

10
Liability for Independent Contractor

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

11
Liability for Independent Contractor

• Negligent hiring
• Hiring an incompetent independat contractor.
• Failing to properly hire, ie. Failure to chek
  background

12
Liability for Independent Contractor

• Nondeligable duty
• Carriers duty to transport passangers
• Municipalitys duty to keep streets in repair
• Railroads duty to maintain safe crossings
• Landlords duty to make proper repairs

13
Liability for Independent Contractor

• Highly dangerous activities
• Excavations
• Demolition
• Blasting