True or False: An agent is liable to the principal if they act outside the scope of their authority.

The statement is true because an agent has a fiduciary duty to act within the scope of their authority as defined by the principal. When agents operate outside this authority, they may engage in actions that do not bind the principal, leading to liability for any loss or damage caused by their unauthorized actions. This principle ensures that agents cannot unilaterally alter business agreements or engage in risky transactions without the principal's consent, protecting the principal's interests.

Understanding the relationship between agents and principals is crucial in hospitality law, especially since many interactions with customers, suppliers, and other third parties occur through agents. If an agent goes beyond their granted authority and acts independently, it can result in legal repercussions and financial liability for the agent rather than the principal. Thus, the emphasis on agents adhering strictly to their designated scope of authority is a foundational concept in agency law.