When you work as an agent of a person (principal) and cause any damages to the third party, the Principal will be held liable for the damages caused. The principals, liability in the contract refers to the liability of the principal in case the agent has caused any damages to the third party. The Principal is liable for the contracts made by the agent, only if the principal authorized the contract, and the third party is communicated to by the principal. There are three types of authority that allows for the principal to be liable for any damages caused by the agent; implied, express and apparent authority (Mann & Roberts, 2015) .
Express authority is granted to the agent in written form, and it gives permission to the third party to work with the agent on behalf of the principal. Implied authority does not give much detail regarding the duties of the agent, and apparent authority makes the third party believe that the agent has the authority to represent the principal (Beatty, Samuelson & Abril, 2018) .
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In the case of Crush and Steve, Crush is the principal and Steve is the agent, Crush has authorized Steve to represent him in various transactions as an agent and to secure him performance contract and endorsement deals. However, the extent to which Steve is using the authority is against the agreement between him and his principal. Steve has conducted business with Jimmy and Fred, without the consent of Crush. According to the law on Principal’s liability, Steve is liable for the damages that might occur in the process of representing Crush, because the law states that the principal is only liable for contracts that he authorizes either written or verbal. However, in this case, Jimmy and Fred assumed the apparent authority and continued with the business. In this case, Crush and Steve are both liable as interpreted by the law; the principal is liable for any damages caused by the agent, also according to tort liability, the agent is also liable for the damages he caused the principle. The tort liability states that a person is always liable for his acts unless that person is insane, intoxicated or acting under extreme stress (Allen & Kraakman, 2016) .
Reference
Allen, W. T., & Kraakman, R. (2016). Commentaries and cases on the law of business organization . Wolters Kluwer law & business.
Beatty, J. F., Samuelson, S. S., & Abril, P. S. (2018). Essentials of Business Law . Cengage Learning.
Mann, R. A., & Roberts, B. S. (2015). Business law and the regulation of business . Nelson Education.
