Liability That May Arise From an Agency Relationship

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Liability That May Arise From an Agency Relationship

When an employee or agent of a business causes harm, injury, or loss, the person or entity harmed by their conduct may be entitled to recover damages from the business. This is due to the legal doctrine of vicarious liability, which holds a person or entity legally responsible for the actions of another, including those that arise from an agency relationship.

Once a business establishes an agency relationship, either through employment or by contract, that business (the “principal”) can be held liable for the actions of the agent based on either:

Actual authority — the agent was acting within the scope of authority granted by the principal. There are two types of actual authority: express and implied.

Apparent authority — while actual authority may not have been granted to the agent, a third party may reasonably infer from the principal’s conduct that the agent had the authority to act on the principal’s behalf.

In general, a principal is liable for the actions of his agent if they control, or have the right to control the agent’s actions. The agent’s actions must fall within the reasonable scope of his or her actual or apparent authority. However, if the control is insufficient, the agent may be deemed an independent contractor and the principal would not be liable.

If the agent violates the authority he or she has been given by the principal, then the agent could be solely liable to a third party. This is especially true if the agent violates a principal’s specific instructions as to the extent of his or her authority by acting outside the scope of that authority.

Vicarious liability claims typically arise from employment situations where an employee causes injury to another person or property. Even if the injury is caused by an employee who is careless or violates company policies while performing their duties, the company can still be held liable if the employee’s actions are within the scope of employment.

Businesses create agency relationships every day without realizing the potential liability exposure created by an agent’s conduct. Although a company is usually held liable for tortious conduct by an agent, it can recover damages if the agent operated outside his or her scope of authority. Consulting with a business litigator is key to determining whether your business has any recourse against an agent who has involved you in a vicarious liability lawsuit.

Mestaz Law has the experience and reputation that you want when you are dealing with a business-related lawsuit. We are here to obtain the best possible outcome for your situation. Do not hesitate to contact Mestaz Law at (602) 806-2068, and see how we can help you resolve your legal matter.


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