Tort Liability: Principal and Agent

Updated 1/5/2024 PG

Paul Weitzel,

Paige G. DuRandt,

Lauren M. Kubat,

Jacob H. Owens, CPA

As is discussed above, the principal-agent relationship presents certain complexities when determining liability. Tort liability is no different. Everybody torts. When an agent torts, who is liable?

Agent's Tort Liability

The agent is liable for the agent's torts even if the principal is also liable. Agents remain liable for torts they personally commit.

Principal's Tort Liability

The principal is liable if:

Actual or Ratified Authority. If the agent acted with actual authority, or if the principal ratified the agent's actions afterwards, then the principal is liable for the tort. Restatement (Third) of Agency § 7.04. For example, if you send me to deliver a pizza in an ice storm, knowing I'm a terrible driver and the roads are unsafe, you will also be liable for any car I hit.

Facilitating Apparent Authority. If a principal gives apparent authority to an agent, and the agent uses that apparent authority to commit or conceal a tort, the principle is liable for the tort. Restatement (Third) of Agency § 7.08. For example, if you tell customers that I'll help with a bike sale, and I lie about how the bike is made of pure vibranium, you've given me apparent authority to sell the bike, I used to to commit the tort of fraud, so you're liable for the tort.

Negligent in Selecting, Training, Retaining or Supervising. If the principal was negligent in selecting, training, retaining or supervising the agent, then the principal is liable for the tort. Restatement (Third) of Agency § 7.05. So if you hire me to deliver a pizza, and you know I always drive blindfolded because I enjoy the thrill, you'll be liable for any car I hit.

Employer Tort Liability. An employer is liable for torts by employees acting within the scope of their employment. Restatement (Third) of Agency § 7.07. Actions are within the scope of employment if they are (1) assigned by the employer or (2) subject to the employer's control. This excludes actions done by the employee in an independent course of action that isn't designed to serve the employer.

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