If an agent acts within the authority provided by the principal, who is liable to the other party?

In scenarios where an agent acts within the authority granted by a principal during a transaction, the principal is primarily liable to the other party. This principle is rooted in the legal concept of agency, which establishes that a principal is responsible for the actions of their agent when those actions are performed within the scope of the authority given.

When an agent acts within their authority, any contracts or agreements made are considered to be on behalf of the principal. Therefore, the principal has the obligation to fulfill any commitments or liabilities that arise from such actions. This reflects the trust and delegation that form the basis of the principal-agent relationship: the principal allows the agent to act on their behalf and is accountable for the results of that action, provided those actions are authorized.

In contrast, while the agent acts as the intermediary, their liability in this situation is typically limited unless they undertake actions beyond their authority, commit fraud, or breach their fiduciary duties. Hence, the legal responsibility lies predominantly with the principal when the agent operates correctly within the parameters provided.