Liability of Agent to Third Parties: On the Contract and Warranty of Authority

Ordinarily, when an agent acts on behalf of a principal the legal rights of the principal are affected, but the agent is not personally liable to third persons with whom he or she has dealt. This lesson looks at those somewhat unusual situations where the agent may be personally liable to third persons.

Learning Outcomes

On completion of the lesson, the student will be able to:

1. Explain the general concept that an agent acts on behalf of a principal and is not personally liable to third persons with whom he or she has dealt.
2. Examine situations where the agent may be personally liable to third persons.
3. State the distinctions between disclosed, undisclosed, and unidentified principals.
4. Discuss the concept of warranty of authority and a plaintiff’s options for recovery.