Tort Liability in Agency Relationships: Definition & Law

Lesson Transcript
Instructor: Ashley Dugger

Ashley has a JD degree and is an attorney. She has extensive experience as a prosecutor and legal writer, and she has taught and written various law courses.

A principal may be held liable for wrongful actions, or torts, taken by an agent. Explore the concept of 'respondeat superior', examples where a principal is held liable, and some where they are not. Updated: 09/27/2021

Principal's Direct Liability

Most organizations conduct business through the use of agency relationships. This type of relationship requires both a principal and an agent. A principal is someone who gives legal authority to another to act on his or her behalf in a business relationship. An agent is someone who is legally authorized to act on behalf of the principal when dealing with a third party in a business transaction.

An agent works as an extension of the principal, just as if the principal was present and acting alone. Therefore, the principal can be held directly liable for the agent's torts, or wrongful acts giving rise to a civil cause of action.

A principal can be held liable when:

  • The principal gave faulty instructions to the agent
  • The principal negligently hired the agent
  • The principal failed to properly supervise the agent

In each of these instances, the principal has acted negligently in his or her handling of the agent. Any tort that arises as a direct result of the principal's negligence will, therefore, be imputed directly to the principal.

For example, let's say Pete runs a plumbing company. He hires Andy as a plumber without conducting research on Andy's experience. As it turns out, Andy isn't a licensed plumber. Andy has a long criminal history and spent the last few years in and out of prison for burglary and theft.

As Andy visits Pete's clients, he steals from the homes rather than completing plumbing jobs. As the principal, Pete can be held directly liable for his clients' damages. This is because Pete failed to properly investigate Andy before hiring him and sent Andy into homes without any supervision.

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  • 0:07 Principal's Direct Liability
  • 2:05 Respondeat Superior
  • 3:35 No Liability for Principal
  • 6:25 Lesson Summary
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Respondeat Superior

Principals can also be held indirectly responsible for an agent's torts through the doctrine of respondeat superior. This is a Latin term, meaning 'let the superior respond.' In practice, this doctrine allows a principal to be held liable for his or her agent's acts committed while in the scope of the agent's authority.

This means that, in general, the principal can only be held liable for the agent's acts when all four of these factors are met:

  • The agent was employed to perform that particular type of act
  • The agent's act occurred at an authorized place and during an authorized time of employment
  • The agent's act was inspired by an intent to assist the principal
  • The agent's method could have been anticipated by the principal

For example, let's say Pete's Plumbing hires Andy as a plumber. This time Andy is licensed, and Pete conducted the proper background checks. Andy is sent to fix a gas leak in a client's home but accidentally fixes the wrong line. The house later explodes. Pete is indirectly liable under the doctrine of respondeat superior because all four factors are met.

No Liability for Principal

Now, let's take a look at an example where a principal isn't liable for an agent's torts. Let's look at the Florida case entitled Iglesia Cristiana La Casa Del Señor, Inc., etc. v. L.M., etc.

L.M. and her family sued former pastor Ali Pacheco, the church he worked for, the district council for that church and the general council for that church. They accused Pacheco of sexually assaulting L.M. while she was a minor. While the district and general councils settled with L.M. and her family, the church and Pacheco proceeded as defendants to a jury trial.

The church was accused of direct liability due to the negligent supervision of Pacheco. The church was also accused of indirect liability for the sexual assault based on respondeat superior. Let's take a closer look at the doctrine of respondeat superior and how it fits with this case.

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