Aware that the deal is with the principal not the

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aware that the deal is with the principal, not the agent. For example, suppose asales engineer negotiates a purchase order for a customer to buy a largequantity of optical lenses from her employer.The lenses are delivered and the customer pays for them. Then the customerclaims that the lenses fail to meet the contract’s specifications and files alawsuit. Because the customer knew that the sales engineer was selling thelenses on behalf of her employer and knew exactly who the employer was, thecompany is liable and the agent is not.What are some ways agents can ensure that third parties are aware of theagency and of the principal’s identity?Business cards listing the agent’s name and title and the principal’snameSignature blocks on e-mails and lettersName tags with titles andidentification badgesLetterhead stationaryCompany charge cards and companychecksSignature on contract, followed by title and company (as in “PhilipTanzani, sales agent for The Beatrice Company”)Tort Liability of Principal and AgentWhat if the circumstances give rise not to contract liability, but to tort liability?Is the principal liable to compensate an injured third party for a tort, such asnegligence? Is the agent liable?
A principal is also liable to third parties for tortious conduct the principal eithercommits or directs the agent to commit.Especially when the principal is a business, sometimes the principal’s negligentconduct, typically negligent hiring or negligent supervision, leads to the agent’scommission of a tort or a crime.As with all negligence cases, foreseeability of risk is a key component. If theagent is being posted to a job that requires entry to customers’ homes,supervising children, working with infirm people, and so forth, then the level ofcare required by the principal in hiring and supervising is correspondinglyhigher.Suppose instead the pizza parlor hired an excellent candidate as driver butinstructed her to exceed the speed limit regularly to deliver more pizzas anddeliver them faster. Again, although the driver was the direct cause of theaccident (and is personally liable), the pizza parlor is also liable for directing thetortious conduct.The principal has the opportunity to control the agent: to supervise him or her,to develop good business policies and practices, etc. Therefore, in manyinstances, the principal can minimize risks to third parties. Also, recall thatprincipals who must pay a third party might have insurance to cover the loss

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Term
Fall
Professor
NoProfessor
Tags
Manufactured Goods

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