Chapter 22

Partially disclosed agent's liability

Agent is liable. The third-party must rely on the agents reputation, integrity, and credit because the principal is unidentified. If the agent is made to pay the contract, the agent can sue the principal for idemnification. The third-party and the agent can agree to relieve the agent's liability. It can be created expressly or by mistake.

Respondeat superior

Basedon the legal theory vicarious liability (liability without fault). A rule that says an employer is liable for the tortious conduct of its employees or agents while they are acting within the scope of the employer's authority.

Example of respondeat superior

Business Corporation employees Harry as it's marketing manager. Harry is driving his car to attend a meeting with a client on behalf of his employer. On their way to the meeting, Harry is involved in an auto accident that is caused by his negligence. Several people are seriously injured because of this. Here, Harry is personally liable to the injured parties. In addition, Business Corporation is also liable as a principal because Harry was acting within the scope of his employment when hecaused the accident

Classifications of principals

Fully disclosed principal, partially disclosed principal, undisclosed principal.

Respondeat superior translation

Let the master answer

Undisclosed Principal's liability

Occurs when a third party is on aware of the existence of an agency. Both principal and agent are liable on the contract with the third-party.

Agent's liabilities on contracts

Partially disclosed, undisclosed, exceeding the scope of authority

Example of undisclosed principal's liability

The Walt Disney Company wants to open a new theme park in Chicago but it first needs to buy land. Disney employees an agent to work On its behalf to buy the land with an express agreement that the agent would not disclose the existence of the agency to a third-party seller. If a seller agrees to sell the land and the agent signs her name, without disclosing the existance of the agency, it is an undisclosed agency. Disney is liable on the contract with the third-party seller and so is the agent.

Undisclosed agent's liability

The agent is liable since he becomes the principal to the contract. (same as partially disclosed)

Agent exceeding the scope of authority

The agent is liable to the third-party for breaching the implied warranty of authority. To recover the third-party must show reliance on the agent's representation and ignorance of the agent's lack of status.

Fully disclosed agent's liability

The agent is not liable on the contract because the third-party relied on the principal's credit and reputation when the contract was made. An agent is liable on the contract if she guarantees that the principal will perform the contract. The agent's signature must clearly indicate that he is acting as an agent for a specifically identified principal.