What happens to the principal’s rights if an agent engages in a breach of warranty of authority?

When an agent breaches a warranty of authority, the principal retains certain rights, particularly those arising from the contract itself, despite the breach. A breach of warranty of authority occurs when an agent acts beyond their actual or apparent authority, leading a third party to believe the agent was authorized to contract on behalf of the principal.

The principal is typically not automatically disadvantaged or stripped of their rights under the contract entered into by the agent. Instead, the principal can choose to affirm the contract, even if the agent exceeded their authority, as long as it does not harm the interests of the principal. This retention of rights allows the principal to benefit from the contract's terms if it aligns with their interests, in contrast to being left with no contractual protections or opportunities.

The available recourse includes the ability to sue the agent for damages resulting from the breach of warranty, thus emphasizing that the principal maintains agency rights despite the breach. This situation illustrates the complexity that can arise in agency relationships, where the principal's legal position can be maintained even when an agent steps outside their designated authority.