COMPLEX CIVIL LITIGATION IN BERGEN AND PASSAIC COUNTIES: THE LIABIILITY OF A PRINCIPAL FOR THE FRAUDULENT CONDUCT OF ITS AGENT

Generally, the law will impute to a principal the fraudulent conduct of its agent, where the agent is acting with the scope of his authority and that is so, even if the conduct is unauthorized or fails to provide a benefit to the principal.

This rule is bottomed upon two practical considerations.  The first is that the principal made the decision to place the agent in a position that allowed the fraud to have occurred.  The second is the so-called “deep pockets” theory of liability which is rooted in the law’s recognition that a principal is more capable than an agent to have the resources to pay the claims of people who have sustained a loss because of civil wrong.