In what situations can an agent be held liable?

An agent can be held liable primarily when they act beyond their authority or breach their duty to the principal. This scenario arises when the agent takes actions that exceed the powers granted to them by the principal or fails to adhere to the established duties and responsibilities that are inherent in the agency relationship.

When an agent acts outside the scope of their authority, it can lead to unauthorized actions that do not legally bind the principal, and the agent may face consequences for failing to follow the terms agreed upon. Additionally, a breach of duty could include any action taken by the agent that compromises the interests of the principal, such as self-dealing or neglecting to act in the best interest of the principal.

In contrast, adhering to explicit instructions from the principal or acting within the scope of authority typically protects agents from liability, as these actions align with the expectations set by the principal. Furthermore, when operating in a disclosed agency relationship, the principal is usually liable for the agent’s actions, placing less risk of liability on the agent when they operate under their full authority and within the bounds of the relationship.