In which scenario can an agent face personal liability?

An agent can face personal liability when they engage in conduct that is outside the bounds of their authority. This scenario occurs because when an agent acts beyond their granted authority, they are not acting on behalf of the principal, which generally protects them from liability arising from the contract.

When an agent exceeds their authority, the principal is not obligated to honor the contract the agent entered into on their behalf. As a result, the third party with whom the agent contracted may look to the agent personally for fulfillment of the agreement or for damages resulting from the breach. Therefore, the agent's actions—taken without the necessary authorization—can lead to personal liability.

In contrast, an agent who acts within their authority typically does not face personal liability for contracts that are within that scope, as the principal is bound to those agreements. Similarly, if the agent is not acting on behalf of any principal, they may also be held personally liable for their actions, but this is a different context than exceeding authority. Lastly, liability is not determined by the beneficial nature of the contract to the principal; rather, it focuses on whether the agent acted within the scope of their authority. This distinction is key in understanding when an agent is personally liable for their actions.