Agent's and principal's liability

In this lesson

1. 0:00 Agent liability and contract enforcement
2. 0:35 When agents become personally liable
3. 1:27 Principal's obligations to agents
4. 2:53 Agency formation types explained
5. 4:19 Identifying agency relationships in practice

About this lesson

Understanding these distinctions is essential for the Corporate and Business Law paper, as examiners test your ability to identify liability in real-world scenarios and recognise different types of agency formation. The video covers agent liability first. Generally, agents aren't liable for contracts they create on behalf of a principal—that responsibility falls to the principal. However, agents can be held personally liable in specific circumstances: when they intend to take on personal liability, when it's customary in their line of work, when they act without a genuine principal, or when they're jointly liable with the principal for failing to disclose their agency status to a third party. Principal liability works differently. Principals must pay agents their agreed remuneration, or a reasonable amount if none is specified. They must also reimburse agents for reasonable expenses incurred during the agency relationship and respect any lien the agent holds over the principal's property until debts are settled. A lien allows an agent to retain possession of the principal's assets until payment is made—for example, an accountant holding client records until fees are paid. The lesson concludes by testing your understanding of how agency relationships form. You'll identify four key types: ratification (when a relationship is formalised after the fact), agency by necessity (when someone must act without being able to contact the principal), estoppel (when a third party relies on a representation that someone is an agent and alters their position), and implied agency (when the agency relationship is implicit in the parties' arrangement).

Duration: 6m