CAN PRINCIPAL SUE ITS AGENT FOR NEGLIGENCE
I confess that today I am surprised by the answer. Yesterday's article concluded that an employer could not sue its employee for negligence. I thought the same rationale for principal and agent. But that's not the case. One on line source concludes:
The agent has the duty of undivided loyalty toward his or her principal. A person cannot act as an agent for more than one party or self-deal with the principal's property without the principal's expressed permission. If the agent has any interests that are adverse to those of the principal, he or she has a duty to disclose them.
The agent is liable for any loss the principal suffers as the result of failure of the agent to complete his or her duties or follow the reasonable directions of his principal. The agent is also obligated to perform his or her duties in a reasonable and prudent manner. This duty applies even to those situations in which the agent is gratuitously acting on behalf of the principal.
If the agent breaches his or her duties, the principal can sue the agent for either breach of contract or in tort. Tort refers to an action brought because of negligent or wrongful acts that cause injuries to others. Under a breach of contract action, an agent can be held liable for any reasonably foreseeable damages that his or her principal suffers as the result of the agent's failure to fulfil the agency contract. In a tort suit, the principal can recover for any damages suffered because of the agent's wrongful or negligent act. In some cases, the principal can also collect punitive damages. Punitive damages are those damages assessed by a court in excess of the actual damages and imposed as punishment.
Another on line source concludes:
The agent is personally liable for his wrongful acts and must reimburse the principal for any damages the principal was forced to pay, as long as the principal did not authorize the wrongful conduct. The agent directed to commit a tort remains liable for his own conduct but is not obliged to repay the principal.
So it appears that your agent stands in a different position than your employee, for whom you are responsible and the employee without liability to you.
Who are your agents? Your independent sales people and any outside subcontractors you engage to design, install, service or monitor your subscriber accounts qualify as "agents". Often [and it should be all the time] your relationship with your agent is expressed in a written agreement. That agreement will typically have an indemnification provision requiring one party to indemnify the other. Sometimes it's the principal indemnifying the agent, but sometimes the principal requires the agent to indemnify the principal. We oftentimes see the principal indemnifying the agent in your agreement with your central station. In that case you are the principal and the central station is your subcontractor, or agent for purposes of dealing with your subscriber.
If there is no contract provision with indemnity then the party who is negligent will be liable, and that party will be held liable to its agent or its principal, as the case may be.
Tomorrow I am going to address another interesting related topic - your relationship with your insurance broker.