In what situations can an agent's actions lead to a principal's liability?

An agent's actions can lead to a principal's liability when the agent acts within the scope of their authority. This principle is grounded in the legal concept of agency, where an agent is authorized to perform acts on behalf of a principal. When an agent operates within the boundaries of the authority granted to them, be it express authority (explicitly stated) or implied authority (inferred from the nature of the agency), the principal is generally held responsible for the agent's actions.

For instance, if a real estate agent is given the authority to negotiate and finalize contracts for property sales, any agreements made within that authority bind the principal, who is the real estate agency. The reasoning behind this liability is rooted in promoting trust and reliability in business relationships—a fundamental aspect of agency law.

While other aspects, such as intentional actions or approval from the principal, might influence liability or the perception of the agent's actions, the core determinant for a principal's liability remains whether the agent acted within their granted authority. Therefore, the principal can still be liable for the agent's actions, even if they were not explicitly approved, as long as those actions fall within the scope of authority given to the agent.