When does an agent’s mistaken assertion create liability for the principal?

An agent’s mistaken assertion creates liability for the principal when the agent acts within the scope of their employment. This principle is rooted in the fundamental legal concept of agency, which holds that a principal can be held responsible for the actions and statements of their agent as long as those actions are performed in the course of their duties and within the boundaries of their authority.

When an agent is acting within the scope of their employment, they are effectively representing the principal in a business capacity. Therefore, if the agent makes a mistake or inadvertently provides incorrect information in the course of performing their job, that misstatement can bind the principal. This is because third parties are entitled to rely on the representations made by agents, believing them to be authorized by the principal.

The other scenarios do not support the establishment of liability in the same way. For instance, if an agent makes a statement outside their employment or demonstrates intentional deceit, these actions may not fall under the authority granted by the principal, thus minimizing or negating the principal's liability. Additionally, the principal's lack of awareness of the situation does not affect the liability that arises from actions taken within the authorized scope of the agent's role. Thus, the correct scenario that establishes liability is the agent acting within the scope of