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Chapter 26 Liability of Principal and Agent; Termination of Agency

Learning Objectives

After reading this chapter, you should understand the following:

  1. The principal’s liability in contract
  2. The principal’s liability in tort
  3. The principal’s criminal liability
  4. The agent’s personal liability in tort and contract
  5. How agency relationships are terminated

In Chapter 25 "Relationships between Principal and Agent" we considered the relationships between agent and principal. Now we turn to relationships between third parties and the principal or agent. When the agent makes a contract for his principal or commits a tort in the course of his work, is the principal liable? What is the responsibility of the agent for torts committed and contracts entered into on behalf of his principal? How may the relationship be terminated so that the principal or agent will no longer have responsibility toward or liability for the acts of the other? These are the questions addressed in this chapter.