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Environment of
Where an agent commits a tort or other wrongful act (for example, misrepresentation or fraud)
Business
during his/her agency, the principal is liable. The principal is liable even if the tort or wrongful
Notes act is committed exclusively for the benefit of the agent and against the interest of the principal
[Section 230]. Examples to this effect are presented in Box 6.18
Example 1
An agent, employed to collect evidence for his principal in a pending law suit, offered to bribe a
witness. It was held that the act was within the course of the employment of the agent and that the
principal was bound by it [Chicago City Rly. Co. vs McMohan16] [Appended to Section 230].
Termination of Agency
Agency, as a contract, gets terminated by any event that terminates a contract, such as by
performance, revocation, or destruction of subject matter, and also in certain special ways.
Accordingly, the various modes of terminating an agency can broadly be classified into the
following two categories:
1. By act of the party, and
2. By operation of law.