CHAPTER 3

pp. 542-554
Liability of Principal for tort of agent
Gen. Rule: The principal is civilly liable
to third persons for torts of an agent
committed at the principals direction or
in the course and within the scope of the
agents employment.
-whether the tort is committed willfully
or negligently has no effect on the extent
or degree of the principals liability.
-Basis: principle that he who does an act
through another does it himself
-The agent, to be sure, is also liable with
the principal and their liability shall ne
solidary.
Business Hazard Theory- advances
the argument that it is thought that the
hazards of business should be borne by
the business directly; it is reasoned that
if the cost then is added to the expense
of doing business, it will ultimately be
borne by the consumer of the product;
that the consumer should pay the costs
which the hazards of the business have
incurred
Motivation-Deviation Test1. Satisfactory evidence that the
employee in doing the act, in the
doing of which the tort was
committed, was motivated in
part, at least, by a desire to serve
his employer.
2. Satisfactory evidence that the act,
in the doing which the tort was

committed, was not an extreme

deviation from the normal
conduct of such employee.
Representation, essence of agency.
1) Agent
acts
in
a
representative
capacity
Representation being the essence
of agency, it is evident that the
obligations contracted by the
agent are for and in behalf of the
principal to bind him as if he
personally contracted.
2) Agent acts within limits of
his authority
The agent who exceeds his
authority is not deemed a
representative of the principal,
unless the principal ratifies the
act expressly or impliedly.
Ratification is the adoption or
affirmance by a person of a prior act
which did not bind him, but which was
done or professed to be done on his
account thus giving effect to the acts as
if originally authorized.
-the very idea of ratification implies that
the principal has an option to ratify or
not, and that he has the advantage over
the other party, to wit: that he may hold
the other party whether the other party
wishes it or not whereas the other party
cannot hold him if he is not willing to be
held.
-based on waiver- the intentional
relinquishment of a known right
Conditions for Ratification

1) The principal must have the

capacity and power to ratify
2) He must have had knowledge or
had reason to know of material or
essential
facts
about
the
transaction
3) He must ratify the acts in its
entirety
4) The act must be capable of
ratification
5) The act must be done in behalf of
the principal
Forms of Ratification
1) Express Ratification
-when the principal simply
informs the agent, the third party,
or someone else of his intention
to honor the agents unauthorized
dealings
2) Implied Ratification
-impliedly communicated his
intent to ratify by words or
conduct that had amounted to
ratification or even by silence or
inaction
where
under
the
circumstances
a
reasonable
person would have expressed
objections to what the agents had
done.
Persons entitled to ratify.
1) It is necessary that the ratifier has
the power or authority to do, on
his account, the original act
which is sought to be ratified.
2) A voidable act or transaction by
reason of incapacity to give
consent may be ratified but the
defect must first be removes
before a valid ratification can take
place

3) The third party has a right to

withdraw after the third party has
already indicated a desire to
withdraw from the transaction
Knowledge by ratifier of Material facts
essential.
Material Facts- they are those which
reasonably ought to be known by the
principal, having in mind the factors of
time, place, and circumstance, and
especially the situation of the parties
-it has been held that to ratify the
unauthorized act of an agent and make
it binding on a corporation, it must be
sown that the governing body or officer
authorized to ratify had full and
complete knowledge of all the material
facts connected with the transaction to
which it relates
-general rule requires actual knowledge
on the part of the principal of relevant
acts as a condition to the imposition
upon him of the obligation of his agents
unauthorized acts
Burden to show such knowledge.
1) Whoever seeks to rely on a
ratification is bound to show that
it was made under such
circumstances as in law to be
binding
on
the
principal,
especially to see that all material
facts were made known to him.
-The burden of making inquiries and of
ascertaining the truth is cast on the
party who is endeavoring to obtain a
benefit or advantage for himself.

2) the principal must have either actual

knowledge of material facts or sufficient
knowledge or notice of other facts so
that it would have been east to find out
the material facts.
An agent is expected and has duty to
inform the principal about relevant facts
that relate the agency

To be bound, however, by the knowledge

received by the agent, the latter must
have actual or apparent authority to
receive this type of knowledge and the
knowledge or information must be
within the scope or subject matter of the
agency.