What potential liability does an agent have when acting on behalf of a principal?

An agent may indeed be liable to the principal for unauthorized acts or breaches of duty because, in an agency relationship, the agent has a fiduciary duty to act in the best interests of the principal. If the agent acts beyond the authority granted by the principal or fails to perform their obligations under the agency agreement, such unauthorized actions may give rise to liability.

When an agent breaches this duty, either by acting outside their scope of authority or by failing to adhere to the terms of the agency agreement, the principal can seek damages from the agent for any resulting losses. This liability serves to protect the integrity of the agency relationship and ensures that agents are accountable for their conduct while acting on behalf of the principal.

The other responses reflect misunderstandings of the scope of an agent's liability. For instance, asserting that the agent is only liable for authorized acts overlooks the responsibilities inherent in the agent's role. Claiming that an agent is immune from any liability fails to recognize that agents must fulfill their duties to the principal and can be held accountable for breaches. Lastly, suggesting that an agent's liability is confined to financial losses disregards the broader implications of their fiduciary duties and potential liabilities involved in their actions.