When a principal makes it possible for an agent to defraud a third party, the principal may also be liable for the fraud.

Question

Quizplus · Accepted Answer

The principal can be held liable for the fraud committed by their agent if they enabled or facilitated the agent's fraudulent actions, especially if the principal failed to properly supervise the agent or provided the means or opportunity for the fraud to occur. This is based on the legal principle of vicarious liability.

When a Principal Makes It Possible for an Agent to Defraud