Which of the following statements is INCORRECT: An agent may be liable to a third party for breach of warranty of authority if they acted outside the scope of their actual authorit... Which of the following statements is INCORRECT: An agent may be liable to a third party for breach of warranty of authority if they acted outside the scope of their actual authority. The general rule is that a third party cannot sue a disclosed principal if the agent acted without authority. If the contract of agency is gratuitous or unilateral then the duty to perform contractual undertaking and obey instructions can never be breached. To fall under the protection of the Commercial Agents Regulations 1993, a commercial agent cannot be employed by the principal.
Understand the Problem
The question is asking which of the listed statements regarding agency law is incorrect. It presents a series of statements about the liabilities of agents, their authority, and the regulations governing commercial agents, seeking to identify the false one.
Answer
The incorrect statement is about the agent's duties in gratuitous or unilateral contracts.
The incorrect statement is: 'If the contract of agency is gratuitous or unilateral then the duty to perform contractual undertaking and obey instructions can never be breached.' This is incorrect because even in gratuitous or unilateral agency contracts, the agent still has duties that can be breached.
Answer for screen readers
The incorrect statement is: 'If the contract of agency is gratuitous or unilateral then the duty to perform contractual undertaking and obey instructions can never be breached.' This is incorrect because even in gratuitous or unilateral agency contracts, the agent still has duties that can be breached.
More Information
Even in a gratuitous or unilateral agency context, agents are expected to fulfill their duties unless specified otherwise in the agreement, meaning breaches can occur.
Tips
Don't assume that lack of financial compensation (gratuitous) removes legal duties for agents.
Sources
- Agency - Business Law - USLegal - businesslaw.uslegal.com
- Principal & Agent Liability in California - Brown & Charbonneau, LLP - bc-llp.com
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