Key Takeaways

  • Under California agency law, agents may bind their principals if acting within actual or ostensible authority.
  • Principals can be liable for agents’ acts, even wrongful ones, if committed within the scope of agency.
  • Agents must act in good faith and within their granted authority to avoid personal liability.
  • Sub-agents may only be used in specific, legally permissible circumstances.
  • Agency relationships can arise from direct appointment or by conduct that implies authority.

California Civil Code Agency Sections 2295-2300, 2304-2326, 2330-2339, 2342-2345, 2349-2351

2295. An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.

2296. Any person having capacity to contract may appoint an agent, and any person may be an agent.

2297. An agent for a particular act or transaction is called a special agent. All others are general agents.

2298. An agency is either actual or ostensible.

2299. An agency is actual when the agent is really employed by the principal.

2300. An agency is ostensible when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him.

2304. An agent may be authorized to do any acts which his principal might do, except those to which the latter is bound to give his personal attention.

2305. Every act which, according to this Code, may be done by or to any person, may be done by or to the agent of such person for that purpose, unless a contrary intention clearly appears.

2306. An agent can never have authority, either actual or ostensible, to do an act which is, and is known or suspected by the person with whom he deals, to be a fraud upon the principal.

2307. An agency may be created, and an authority may be conferred, by a precedent authorization or a subsequent ratification.

2308. A consideration is not necessary to make an authority, whether precedent or subsequent, binding upon the principal.

2309. An oral authorization is sufficient for any purpose, except that an authority to enter into a contract required by law to be in writing can only be given by an instrument in writing.

2310. A ratification can be made only in the manner that would have been necessary to confer an original authority for the act ratified, or where an oral authorization would suffice, by accepting or retaining the benefit of the act, with notice thereof.

2311. Ratification of part of an indivisible transaction is a ratification of the whole.

2312. A ratification is not valid unless, at the time of ratifying the act done, the principal has power to confer authority for such an act.

2313. No unauthorized act can be made valid, retroactively, to the prejudice of third persons, without their consent.

2314. A ratification may be rescinded when made without such consent as is required in a contract, or with an imperfect knowledge of the material facts of the transaction ratified, but not otherwise.

2315. An agent has such authority as the principal, actually or ostensibly, confers upon him.

2316. Actual authority is such as a principal intentionally confers upon the agent, or intentionally, or by want of ordinary care, allows the agent to believe himself to possess.

2317. Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess.

2318. Every agent has actually such authority as is defined by this Title, unless specially deprived thereof by his principal, and has even then such authority ostensibly, except as to persons who have actual or constructive notice of the restriction upon his authority.

2319. An agent has authority:

1. To do everything necessary or proper and usual, in the ordinary course of business, for effecting the purpose of his agency; and,

2. To make a representation respecting any matter of fact, not including the terms of his authority, but upon which his right to use his authority depends, and the truth of which cannot be determined by the use of reasonable diligence on the part of the person to whom the representation is made.

2320. An agent has power to disobey instructions in dealing with the subject of the agency, in cases where it is clearly for the interest of his principal that he should do so, and there is not time to communicate with the principal.

2321. When an authority is given partly in general and partly in specific terms, the general authority gives no higher powers than those specifically mentioned.

2322. An authority expressed in general terms, however broad, does not authorize an agent to do any of the following:

(a) Act in the agent's own name, unless it is the usual course of business to do so.

(b) Define the scope of the agency.

(c) Violate a duty to which a trustee is subject under Section 16002, 16004, 16005, or 16009 of the Probate Code.

2323. An authority to sell personal property includes authority to warrant the title of the principal, and the quality and quantity of the property.

2324. An authority to sell and convey real property includes authority to give the usual convenants of warranty.

2325. A general agent to sell, who is entrusted by the principal with the possession of the thing sold, has authority to receive the price.

2326. A special agent to sell has authority to receive the price on delivery of the thing sold, but not afterward.

2330. An agent represents his principal for all purposes within the scope of his actual or ostensible authority, and all the rights and liabilities which would accrue to the agent from transactions within such limit, if they had been entered into on his own account, accrue to the principal.

2331. A principal is bound by an incomplete execution of an authority when it is consistent with the whole purpose and scope thereof, but not otherwise.

2332. As against a principal, both principal and agent are deemed to have notice of whatever either has notice of, and ought, in good faith and the exercise of ordinary care and diligence, to communicate to the other.

2333. When an agent exceeds his authority, his principal is bound by his authorized acts so far only as they can be plainly separated from those which are unauthorized.

2334. A principal is bound by acts of his agent, under a merely ostensible authority, to those persons only who have in good faith, and without want of ordinary care, incurred a liability or parted with value, upon the faith thereof.

2335. If exclusive credit is given to an agent by the person dealing with him, his principal is exonerated by payment or other satisfaction made by him to his agent in good faith, before receiving notice of the creditor's election to hold him responsible.

2336. One who deals with an agent without knowing or having reason to believe that the agent acts as such in the transaction, may set off against any claim of the principal arising out of the same, all claims which he might have set off against the agent before notice of the agency.

2337. An instrument within the scope of his authority by which an agent intends to bind his principal, does bind him if such intent is plainly inferable from the instrument itself.

2338. Unless required by or under the authority of law to employ that particular agent, a principal is responsible to third persons for the negligence of his agent in the transaction of the business of the agency, including wrongful acts committed by such agent in and as a part of the transaction of such business, and for his willful omission to fulfill the obligations of the principal.

2339. A principal is responsible for no other wrongs committed by his agent than those mentioned in the last section unless he has authorized or ratified them, even though they are committed while the agent is engaged in his service.

Liability of Principals for Agent Conduct

Under California agency law, a principal may be held legally responsible for the acts of their agent—even for negligent or wrongful conduct—if those acts occur within the course and scope of the agency relationship. For instance:

  • Negligence or Misconduct: If an agent commits a wrongful act, such as misrepresentation or negligence, while carrying out their authorized duties, the principal may be liable.
  • Willful Acts: A principal can also be liable for intentional torts committed by the agent if they were committed during and in furtherance of the agency's purpose.
  • Unauthorized Acts: When agents exceed their authority, the principal is only bound by the authorized portion of the transaction unless the unauthorized part cannot be separated.

However, a principal is generally not responsible for acts that fall outside the agent’s scope unless they ratify the conduct or benefit from it knowingly.

2342. One who assumes to act as an agent thereby warrants, to all who deal with him in that capacity, that he has the authority which he assumes.

2343. One who assumes to act as an agent is responsible to third persons as a principal for his acts in the course of his agency, in any of the following cases, and in no others:

1. When, with his consent, credit is given to him personally in a transaction;

2. When he enters into a written contract in the name of his principal, without believing, in good faith, that he has authority to do so; or,

3. When his acts are wrongful in their nature.

2344. If an agent receives anything for the benefit of his principal, to the possession of which another person is entitled, he must, on demand, surrender it to such person, or so much of it as he has under his control at the time of demand, on being indemnified for any advance which he has made to his principal, in good faith, on account of the same; and is responsible therefor, if, after notice from the owner, he delivers it to his principal.

2345. The provisions of this Article are subject to the provisions of Part I, Division First, of this Code.

When Agents Can Be Held Personally Liable

Although agents typically act on behalf of a principal and are not personally liable, California agency law does recognize circumstances in which the agent may be responsible:

  • Misrepresenting Authority: If an agent acts without proper authority and enters a binding agreement, they may be personally liable for any resulting damages.
  • Acting in Own Name: When an agent intentionally or unintentionally contracts in their own name rather than that of the principal.
  • Wrongful Acts: If the agent’s behavior is fraudulent, illegal, or clearly outside the bounds of their authority, personal liability may be imposed.

This liability arises to protect third parties who rely on the apparent authority or representations of the agent.

2349. An agent, unless specially forbidden by his principal to do so, can delegate his powers to another person in any of the following cases, and in no others:

1. When the act to be done is purely mechanical;

2. When it is such as the agent cannot himself, and the sub-agent can lawfully perform;

3. When it is the usage of the place to delegate such powers; or,

4. When such delegation is specially authorized by the principal.

2350. If an agent employs a sub-agent without authority, the former is a principal and the latter his agent, and the principal of the former has no connection with the latter.

2351. A sub-agent, lawfully appointed, represents the principal in like manner with the original agent; and the original agent is not responsible to third persons for the acts of the sub-agent.

Delegation of Authority and Use of Sub-Agents

While agents in California may not freely delegate their authority, there are exceptions under which delegation is permitted:

  1. Ministerial Acts: Tasks that are purely mechanical and do not require discretion.
  2. Impossibility or Incapacity: If the agent cannot lawfully or physically perform the task.
  3. Custom of the Trade: Delegation is permitted when it’s customary in the industry or region.
  4. Express Authorization: The principal explicitly allows the use of a sub-agent.

Unauthorized delegation may sever the link between the original principal and the sub-agent, making the original agent fully liable for the sub-agent’s actions.

Frequently Asked Questions

1. What is the difference between actual and ostensible authority in California agency law? Actual authority is explicitly granted by the principal, while ostensible authority arises when the principal’s conduct leads a third party to reasonably believe the agent has authority.

2. Can a principal be liable for an agent's torts in California? Yes. If the agent's tortious act was committed within the scope of their agency duties, the principal may be liable—even for intentional acts.

3. When is an agent personally liable under California law? An agent may be liable when acting without authority, entering contracts in their own name, or engaging in wrongful or fraudulent conduct.

4. Can an agent delegate tasks to others? Only under specific conditions, such as mechanical tasks, incapacity, or with the principal’s consent. Unauthorized delegation could result in the agent bearing responsibility.

5. Is a written contract necessary to create an agency relationship in California? Not always. Oral agreements or even conduct may establish agency unless the contract involved must legally be in writing (e.g., for real estate transactions).

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