CHAPTER- IV

CONCLUSION

The main attribute for the principal to be stated as ‘vicariously liable’ either for fraud or
misrepresentation done through his/her agent, is to prove that the agent acted with the scope
of the principal’s authority. Additionally, the act should also be performed in the course of
employment. And it is not necessary for the principal to execute the act, either for his benefit
or for the benefit of the agent.

As shown in some cases, that the court has looked that whether the principal had the
knowledge of the fraud being committed by the agent. Additionally, it was also seen whether
the principal has prevented the agent act, as it was within the scope of authority.

The case laws help the principal to prove that he is not liable for the acts committed by the
agent and that he/she didn’t had any knowledge of the agents act or that the agent didn’t
worked within the employment period. The paradigm relationship takes place when the
principal consents that the agent shall act on his/ her behalf and the agent agrees to it. This
leads to formation of authority on the agent which guides the agent. Thus, without this
authority the cannot act, which can either lead to fraud or misrepresentation. In the case of
Apparent authority, it allows the 3rd party to trust the appearance of authority and hold the
principal liable as if there was existence of consent. 1 Therefore, in cases of fraud committed
by the agent, 3rd parties are involved and therefore apparent authority may apply.

Some cases cited in chapter 2 above, state mention servant-master relationship and the scope
of employment, which can be used in new cases as the main factor to prove principal’s
liability. But it doesn’t mean that if a principal hires an agent, he/ she has the freedom to
behave fraudulently. Here the ostensible authority comes into play and this scope of authority
played an important part in differentiating liability. If an agent goes beyond the set authority
then the principal cannot be held liable.