An agent is a person who is authorized to act on behalf of a principal. Agents can bind a principal to legal obligations and can create liability for a principal by taking actions within the scope of the agent’s authority. Agents have express actual authority to bind a principal if the agents are expressly permitted to do so in a contract or other understanding between the principal and the agent. An agent has implied actual authority to bind the principal if its actions are reasonably necessary to carry out its express authority. For instance, a Chief Financial Officer
of a company may have express actual authority to prepare financial statements on behalf of the company and may have implied actual authority to bind the company to employment contracts for financial analysts. In certain jurisdictions, agents can be deemed to have apparent authority to bind a principal, even if the principal has not expressly authorized agents to so act, if the agents act within authority usually bestowed upon agents of similar character. In these cases, however, agents are typically responsible for any liabilities arising out of its apparent authority. Whether an employee is acting as an agent of an employer or acting independently can be a critical element in determining whether the employer or the employee is liable to third parties for torts. For example, if a pizza delivery driver causes a collision while delivering pizza or when leaving a gas station, the pizza company would likely be liable for any damages. However, if the delivery driver causes a collision while running a personal errand, the driver will likely be liable for damages.