Question

please answer this question at least 200 words! thank you!

What can agents do to protect themselves from liability for the acts of the principal? Consider and discuss the alternatives and possibilities. What exactly are the alternatives?

Answer 1

• Agent:  Agent is just a connecting link between Principal & third parties. He brings Principal into contractual relations with third person. He represents Principal & does not act for him on his behalf.

A person may employ an agent if :

• He is of the age of majority &
• He is of sound mind.
• It is not necessary for an agent to have contractual capacity because Principal is liable all the times. But for the interest of the Principal, he should not be minor or of unsound mind.
• An agent is employed to bring the principal into legal relations with third persons or to represent him in dealings with third persons.
• A person is liable for the wrongs of his agent done within the scope of his authority.

• Agents can protect themselves from the actions of a principal by ensuring that the agency contract between the parties contains certain terms to protect the agent.
• Some alternatives and possibilities may include:
  • Whatever a person can do personally, he can do through an agent. So, in case of any default, all the liabilities Will be borne by the principal.
  • Agent must ensure that agreement for his appointment must be in writing. Its usually form is the power of attorney on a stamped paper.
  • For his protection, agent must ensure that the agent has some exclusive right to sell on behalf of the principal in a specified area or for a specified time period. This will ensure that the principal will not infringe on the agents efforts by competing with the agent.
  • So, all the liabilities borne by the principal.
• Personal liabilities of agent arises only in the following exceptions:
  • When the contract expressly provides that if the third party stipulates that agent will be liable then he will be.
  • When the agent acts for an undisclosed principal; although after being discovered principal is also liable.
  • When he acts for a principal who can not be sued where principal is incompetent to enter in to a contract, in case of a minor or unsound.
  • When he signs the contract in his own name without qualification.
  • When he acts for a principal not in existence.
  • Where he is liable for breach of warranty of authority.
  • Where his authority is coupled with interest.
• So, an agent must not indulge in above activities as well from protection of liabilities.