(7) Position of principal with regard to third parties
  1. Disclosed principal
a. Where an agent makes a contract with a third party on behalf of an existing disclosed principal pursuant to the agent's actual authority or where the agent's unauthorised act is validly ratified by the principal, the principal alone can sue and be sued by the third party on that contract. If the principal is bound by the acts of his agent under the doctrine of apparent authority or agency of necessity, the principal is contractually liable to the third party.
b. A disclosed principal may be liable for money paid to his agent in respect of transactions conducted by the agent within his authority. Even though the agent has absconded with the money and the principal has not received the money, the principal is still required to perform his obligations under the relevant contract. By the same token, where a principal is required to make a payment to a third party pursuant to a contract effected by his agent within the agent's authority, payment to his agent with instruction that the money is to be paid over to the third party will not, as a general rule, discharge the principal's liability to the third party if the agent absconds with the money and no payment is received by the third party.
c. Pursuant to the law on apparent or ostensible authority (as discussed in section 4(2)), a principal who represents to a third party that the agent has authority to act for him in certain matters when in fact the agent has not, will be estopped from denying such agent's authority if that third party has relied and acted on such agent's authority.
  2. Undisclosed principal
    (Please see section 10(2) below.)
  3. Vicarious liability for torts of an agent
a. If the agent is the employee of the principal, the principal will be liable for loss or injury caused by the negligence or other torts (civil wrong) of the agent when acting in the course of his employment. This is the doctrine of vicarious liability. This doctrine states that where the agent is an employee of the principal and if the employee commits a tort against a third party in the course of his employment, the principal is said to be vicariously liable for his agent's tort.
b. Generally, a principal is liable for the tort committed by his agent acting within the scope of his actual or apparent authority. In particular, a principal is liable:
i. if the wrongful act was authorised or ratified by the principal;
ii. if the wrongful act amounts to a breach by the principal of a duty personal to himself and which cannot be delegated to his agent; and
iii. in the case of a misstatement made by the agent within the actual or apparent authority given by the principal, for example, a negligent misstatement regarding the physical condition of the property which induces a purchaser to enter into a contract for the purchase of the property.

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