Business Organizations

Restatement Third of Agency

If yes, then
principal liable.
Principal’s Did agent have authority
to make contract?
Liability If no, then principal
not liable.

§§1.04(2)(a), 6.01
Disclosed Principal.
Types of Authority If fully disclosed
Contract Actual (Express, Implied & Incidental): §2.01 principal, then agent not
Apparent: §2.03 liable.
Liability Ratification: §4.01
If yes, agent’s §§1.04(2)(c), 6.02
liability depends on Unidentified Principal.
third party’s If unidentified principal,
knowledge of then agent liable.
principal.
Agent’s Did agent have §§1.04(2)(b), 6.03
Liability authority to Undisclosed Principal.
make contract? §§6.10, 6.11 If undisclosed principal,
If no, agent is liable. then agent liable.
Based on contract
In an agency or tort theory.
relationship,
who is liable
§7.03(1)
for the Principal subject to
agent’s acts? direct liability when:
a) Agent acts with actual authority
or principal ratifies the act, and act
is tortious;
Principal’s b) Principal negligent in selecting,
supervising or controlling agent; or
Liability c) Principal delegates to agent duty §7.07(2)
to act with care to persons or An employee acts within the
property and agent fails in that duty.
scope of employment when
performing work assigned by the
§§7.03(2), 2.04
employer or engaging in a course
Principal subject to §7.07(3)(a)
vicarious liability when:
of conduct subject to the
Tort An employee is an agent
a) Agent is an employee who employer’s control.
whose principal controls or
Liability commits a tort while acting within has the right to control the
scope of employment; or An employee does not act within
manner and means of the
b) Agent commits a tort when the scope of employment when
agent’s performance of work.
acting with apparent authority. the act occurs within an
independent course of conduct
not intended by the employee to
serve any purpose of the
§7.01 employer.
Agent’s
Agent’s Liability.
Liability Agent liable for
own torts.