Law of Agency and the Liability of an Agent

In situations where a third party suffers a loss, damage or injury as a result of the wrongful act or omission of the agent, the latter remains liable to him personally. The agent is liable directly as the perpetrator of the wrongful act or omission and jointly with his principal. His liability exists notwithstanding that he was acting with the express authority or instruction or order of the principal or for the benefits of the principal.

In Baschet V London Illustrated Standard Co. (1900)1 Ch. D. 73.  It was held that an author whose copyright has been infringed was entitled to recover separate damages against every infringer, whether principal, agent or servant. Unless the action of the agent is ratified by the principal, the agent will  be personally liable. The same applies to a situation where the agent departs from the scope of his employment.

EXCEPTIONS

a) If the wrongful act or omission complained of will not  be tortuous as regard his principal who has ratified it.

b) If the wrongful act or omission complained of requires a specific state of mind at the time of its commission, and he did not have that state of mind at the time, e.g. innocent misrepresentation.

c) If the agent is personally immuned from suit on the wrongful act or omission complained of even though the principal may remain liable.

Therefore, the liability of an agent in an agency relationship will be discussed under the following:

• Liability if the principal is disclosed
• Liability if the principal is not disclosed
• Liability of the principal doesn’t exist.
• Liability in the case of a corporate organisation
• Liability in the case of a foreign principal.

Liability Of Agents If The Prinipal Is Disclosed

In the case of Akalonu vs Omokaro(2003) FWLR pt 175, the court held that where the principal is disclosed in a transaction with third parties, the principal is the only person who can sue or be sued in relation to the transaction. However, this would not apply where:

• Where an agent executes a deed on behalf of the principal but in his own name, the agent would be liable.
• If an agent signs his name on a bill of exchange without describing that he is acting on his principal’s behalf.
• If the agent contracts on behalf of a non-existent principal.
• An agent that undertakes to be personally liable when contracting for his principal. Liability arises against an agent that warrants on an authority which he actually doesn’t possess. See Collen vs Wright (1857) 7 E & B 301

Liability Of Agents If The Principal Is Undisclosed

If an agent acts on behalf of a principal but he doesn’t disclose this, such agent would be liable for the contract with the third party; Humble vs Hunter (1848) QB 310. However, in the case of Morel Brothers vs Westmoreland (1904) AC 11, it was held that if the third party susbequently discovers the identity of the principal before an action is taken or judgement is given, such third party can sue the principal.

Also, on equitable grounds, where an undisclosed principal has gained a benefit in a contract entered on his behalf by his agent, he is responsible for liabilities that arise from the contract.

Liability Of Agents Where The Principal Is Non-Existent.

If an agent enters into a contract for a principal that doesn’t exist, such agent would be personally liable for the contract. In the case of Kelner vs Baxter(1886) LR 2 CP 174, the defendant went into contract on behalf of a company that was yet to be incorporated. It was held that since the company wasn’t incorporated, it never existed. Hence the agent was held to be liable.

Liabilities Of Agents In The Case Of A Corporate Entity

In the case of Okolo & Ors vs UBN(2004) NSCQR 108. The court held that where a director enters into a contract on behalf of an incorporated company, such company would bear liability.

Liability In The Case Of A Foreign Principal

In the case of Asafe vs Alraine & Ors Ltd10 NSCQR 556, the court held that when an agent enters into a transaction on behalf of a foreign principal, such agent would be liable for the contract.

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