What legal implications arise when an agent misrepresents their authority?

When an agent misrepresents their authority, both the agent and the principal may face legal implications. This situation arises from the principle of agency law, which holds that an agent acts on behalf of a principal and has the authority to bind the principal in contracts and agreements. If the agent exceeds or misrepresents their authority, the consequences can affect both parties involved.

The agent can be held liable for any damages caused by their misrepresentation because they acted outside the scope of their granted authority. This can lead to the aggrieved third party seeking damages directly from the agent. On the other hand, the principal may also be liable if the third party reasonably believed the agent had the authority to act on their behalf based on the agent's conduct or representations. This shared liability arises because it is the principal's duty to ensure that agents are appropriately empowered and to communicate their authority clearly.

In situations where the third party suffers harm due to the agent's misrepresentation, the law seeks to protect the party who relied on the agent's representations. Therefore, both the agent and the principal can be held accountable for the misrepresentation, which underscores the importance of clarity in the agent's authority when dealing with third parties.