Describe five instances under which an agent might be held personally liable to third parties
The instances under which an agent might be held personally liable to third parties
- Fictitious person or a non-existent person – If the principal does not exist. For example: When a promoter makes a contract for a company which has not yet been registered.
- Unauthorized Acts such as an agent acting beyond the principal’s authority
- Misrepresentation or fraud by agent – An agent is personally responsible if he makes misrepresentations or frauds acting in course of the business of the principal.
- Pretended agents – A pretended agent does not have authority. When the other party to the contract suffers damage, he can sue the agent for breach of warranty of authority. The pretended agent is liable to pay damages under the Law of Torts. The liability arises even when the agent acted innocently.
- Representation as to liability–If a person induces the principal to act on the belief that the agent only will be held liable, he cannot afterwards hold the principal liable on the contract.
- Right of person dealing with agent personally liable -In cases where the agent is personally liable, a person dealing with him may hold either him or his principal, or both of them liable.