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Principal is NOT liable for the agents act if
- a)Agent acts within the scope of his authority
- b)Agent exceeds his authority
- c)Fraud or misrepresentation committed for benefit of the principal
- d)Work done out of his authority but the principal accepts it
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
Principal is NOT liable for the agents act ifa)Agent acts within the s...
Explanation:
- Agent exceeds his authority: When an agent acts beyond the scope of his authority, the principal is not liable for the agent's actions. This means that if the agent goes beyond what he is permitted to do, the principal cannot be held responsible for any consequences that may arise.
Most Upvoted Answer
Principal is NOT liable for the agents act ifa)Agent acts within the s...
Understanding Principal-Agent Liability
In the context of agency law, the principal is typically liable for the acts of the agent when those acts are performed within the scope of the agent’s authority. However, there are specific circumstances where the principal may not be liable, particularly when the agent acts beyond their given authority.
Key Points on Liability
- Agent Acts Within the Scope of Authority:
The principal is liable when the agent acts within the authority granted to them. This includes any actions the agent is allowed to take as per the agreement with the principal.
- Agent Exceeds Authority:
This is where the principal is NOT liable. If the agent goes beyond the scope of their authority—meaning they engage in actions or make decisions not authorized by the principal—the principal is not responsible for those acts. This limitation protects the principal from unauthorized commitments made by the agent.
- Fraud or Misrepresentation:
If the agent commits fraud or misrepresentation for the benefit of the principal, the principal may still be held liable under certain circumstances. However, if the actions were beyond the authority, the principal's liability may be minimized.
- Work Done Out of Authority but Accepted:
If the principal accepts work done by the agent that was outside their authority, the principal may assume some liability. This acceptance can create an implied authority, binding the principal to the agent's actions.
Conclusion
In summary, the principal is not liable for the agent's acts if the agent exceeds their authority, as this protects the principal from unauthorized actions that could lead to liability. Understanding these distinctions is crucial for both agents and principals in their business dealings.
In the context of agency law, the principal is typically liable for the acts of the agent when those acts are performed within the scope of the agent’s authority. However, there are specific circumstances where the principal may not be liable, particularly when the agent acts beyond their given authority.
Key Points on Liability
- Agent Acts Within the Scope of Authority:
The principal is liable when the agent acts within the authority granted to them. This includes any actions the agent is allowed to take as per the agreement with the principal.
- Agent Exceeds Authority:
This is where the principal is NOT liable. If the agent goes beyond the scope of their authority—meaning they engage in actions or make decisions not authorized by the principal—the principal is not responsible for those acts. This limitation protects the principal from unauthorized commitments made by the agent.
- Fraud or Misrepresentation:
If the agent commits fraud or misrepresentation for the benefit of the principal, the principal may still be held liable under certain circumstances. However, if the actions were beyond the authority, the principal's liability may be minimized.
- Work Done Out of Authority but Accepted:
If the principal accepts work done by the agent that was outside their authority, the principal may assume some liability. This acceptance can create an implied authority, binding the principal to the agent's actions.
Conclusion
In summary, the principal is not liable for the agent's acts if the agent exceeds their authority, as this protects the principal from unauthorized actions that could lead to liability. Understanding these distinctions is crucial for both agents and principals in their business dealings.
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