When can an agent be personally liable for their actions?

An agent can be personally liable for their actions when acting outside their scope of authority. This principle is grounded in the concept that an agent is only authorized to represent the principal in designated matters and is expected to adhere strictly to the limits set by the principal. If an agent exceeds these boundaries or acts in ways that the principal did not authorize or approve, they may be held personally liable for any resulting consequences or damages.

When an agent takes independent actions that diverge from the authority granted, it can have implications both for the agent and the principal. The principal is typically not bound by unauthorized acts, meaning the agent may face personal legal repercussions, such as lawsuits or financial liability due to the unauthorized conduct. This reinforces the importance of understanding and adhering to the scope of authority delineated in the agency relationship.

The other options do not accurately characterize situations of personal liability. Acting within their authority and following the principal’s instructions generally protects an agent from personal liability, as these actions are part of their designated role. Failing to inform the principal could lead to consequences for the principal or impact the agency relationship but does not inherently make the agent personally liable in the same way that acting outside of authority does.