BA Liability of a Principal to Third Parties Set 1

Scope of Employment:

(1) Performing work assigned by the employer, (2) subject to the employer's control, (3) not independent course of conduct not intended to serve the employer.

Principal's Liability- In General: (1) A principal is subject to direct liability to a third party harmed by an agent's conduct when

(a) as stated in § 7.04, the agent acts with actual authority or the principal ratifies the agent's conduct and (i) the agent's conduct is tortious, or (ii) the agent's conduct, if that of the principal, would subject the principal to tort liability; or (b) as stated in § 7.05, the principal is negligent in selecting, supervising, or otherwise controlling the agent; or (c) as stated in § 7.06, the principal delegates performance of a duty to use care to protect other persons or their property to an agent who fails to perform the duty.

Principal's Liability- In General: (2) A principal is subject to vicarious liability to a third party harmed by an agent's conduct when

(a) as stated in § 7.07, the agent is an employee who commits a tort while acting within the scope of employment; or (b) as stated in § 7.08, the agent commits a tort when acting with apparent authority in dealing with a third party on or purportedly on behalf of the principal.

A principal is subject to vicarious liability to a third party harmed by an agent's conduct when

(b) the agent commits a tort when acting with apparent authority in dealing with a third party on, or purportedly on, behalf of the principal.

Agent's Liability to Third Party

An agent is subject to liability to a third party harmed by the agent's tortious conduct.

Duty to Principal; Duty to Third Party

An agent's breach of a duty owed to the principal is not an independent basis for the agent's tort liability to a third party. An agent is subject to tort liability to a third party harmed by the agent's conduct only when the agent's conduct breaches a duty that the agent owes to the third party.

Employee

Principal controls or has the right to control the manner and means of the agent's performance of work.

Principal Does Not Exist or Lacks Capacity

Unless the third party agrees otherwise, a person who makes a contract with a third party purportedly as an agent on behalf of a principal becomes a party to the contract if the purported agent knows or has reason to know that the purported principal doesn't exist or lacks capacity to be a party to a contract.

Agent for Undisclosed Principal

When an agent acting with actual authority makes a contract on behalf of an undisclosed principal, (1) unless excluded by the contract, the principal is a party to the contract; (2) the agent and the third party are parties to the contract; and (3) the principal, if a party to the contract, and the third party have the same rights, liabilities, and defenses against each other as if the principal make the contract personally, subject to §§ 6.05-6.09.

Agent for Disclosed Principal

When an agent acting with actual or apparent authority makes a contract on behalf of a disclosed principal, (1) the principal and the third party are parties to the contract; and (2) the agent isn't a party to the third contract unless the agent and third party agree otherwise.

Agent for Unidentified Principal

When an agent acting with actual or apparent authority makes a contract on behalf of an unidentified principal, (1) the principal and third party are parties to the contract; and (2) the agent is a party to the contract unless the agent and the third party agree otherwise

1. When a principal is liable for an agent's tort in 3 ways...way 1

a. 7.03(1)(a) the agent acts with actual authority or the principal ratifies the agent's conduct and (i) the agent's conduct is tortious or (ii) the agent's conduct, if that of the principal, would subject the principal to tort liability.

1. When is the principal subject to vicarious liability to a third party harmed by an agent's conduct?

a. An employee acting within the scope of their business.

Unless and applicable statute provides otherwise, an actor remains subject to liability although the actor

acts as an agent or an employee, with actual or apparent authority, or within the scope of employment

in agency relationships, the employer should be held to expect risks which arise out of

and in the course of his employment.

When a principal is liable for an agent's tort in 3 ways...way 2

b. 7.03(1)(b) the principal is negligent in selecting, supervising, or otherwise controlling the agent,

When a principal is liable for an agent's tort in 3 ways...way 3

c. 7.03(1)(c) the principal delegates performance of a duty to use care to protect other persons or their property to an agent who fails to perform the duty.

for holding a principal liable,

c. Foreseeability is key. The particular type of harm doesn't have to be foreseeable. The scope of employment can include characteristic of the job of what's to be done.

2. Principal liability with respect to acts of non-employee agents (independent contractors) will mostly be because of

direct liability or because principal lacks all that control we needed for vicarious liability.

Characteristic Risk Test: If the tort is a generally

foreseeable consequence of the enterprise undertaken by the employer or is incident to it.

d. Characteristic Risk Test: i. Liability if some harm is foreseeable, regardless of

the fact that the particular type of harm was unforeseeable.

Characteristic Risk Test: iii. If the employee's conduct is not so

unusual or startling that it seems unfair to include the loss resulting from it in the employer's business costs.