Chapter 40: Third Persons in Agency

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• Chapter 40 Third Persons in Agency

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Liability of Agent to Third Person

• An agent of a disclosed principal who makes a
  contract with a third person within the scope of
  authority has no personal liability on the
  contract.
• A person purporting to act as an agent for a
  principal warrants by implication that there is
  an existing principal with legal capacity and
  that the principal has authorized the agent to
  act.
• If the person acting as an agent is not
  authorized, he is liable for any loss caused the
  third person for breach of these warranties.

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Liability of Agent to Third Person

• An agent of a partially disclosed or an
  undisclosed principal is a party to the contract
  with the third person. The agent may enforce the
  contract against the third person and is liable
  for its breach.
• To avoid problems of interpretation, an agent
  should execute a contract Principal, by Agent.
  Agents are liable for harm caused third persons
  by their fraudulent, malicious, or negligent
  acts.

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Agents Signatures
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Liability of Agent to Third Person
AUTHORIZED ACTION
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Liability of Agent to Third Person
Unauthorized Action Or Principal Without Capacity
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Liability of Agent to Third Person
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Liability of Principal

• An undisclosed or a partially disclosed principal
  is liable to a third person on a simple contract
  made by an authorized agent.
• A principal or an employer is vicariously liable
  under the doctrine of respondeat superior for the
  torts (and some crimes) of an agent or an
  employee committed within the scope of authority
  or the course of employment.

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Liability Issues
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Sales Agents

• A salesperson is ordinarily an agent whose
  authority is limited to soliciting offers
  (orders) from third persons and transmitting them
  to the principal.
• The principal is not bound until he or she
  accepts the order.
• The customer may withdraw an offer at any time
  prior to acceptance.