Restatement (Third) of Agency · Section § 7-03
This section addresses the liability of an agent to a principal for non-performance or breach of duty.
Source: Restatement Restatement (Third) of Agency § § 7-03
An agent is liable to the principal for intentional or negligent conduct that harms the principal's interests or breaches the duty of care, which includes any failure to perform a responsibility that a reasonable agent would perform in similar circumstances.
This section establishes that agents can be held liable to their principals if they intentionally or negligently act in a way that harms the principal. It emphasizes that agents must perform their duties with a level of care expected from a reasonable agent.
An agent is required to act with the utmost good faith towards the principal.
A deviation from standard care can result in liability for damages.
Illustration 1
If an agent ignores necessary maintenance of a property resulting in damage, they may be liable for neglecting their duties.
Illustration 2
An agent who misrepresents a fact to a principal in order to secure a deal may be responsible for any resulting losses.
The case illustrated how an agent's failure to disclose information led to liability under § 7-03.
This section is crucial for ensuring that agents understand their responsibilities and the consequences of their actions. It serves as a guide for both agents and principals in navigating their legal relationship and understanding potential liabilities.