Agent in its individual capacity: Overview, definition, and example
What is an agent in its individual capacity?
An "agent in its individual capacity" refers to a person or entity acting on behalf of another party (the principal) but in their own name, rather than in the name of the principal. In this case, the agent is not representing the principal's interests directly but is engaging in a transaction or action as an independent party. This could occur in situations where the agent has personal obligations or rights in addition to the duties owed to the principal.
For example, a lawyer representing a client in a legal matter might enter into an agreement in their individual capacity, rather than on behalf of the client, if they are personally responsible for certain actions or liabilities.
Why is an agent in its individual capacity important?
An agent acting in its individual capacity is important because it helps clarify the personal involvement or liability of the agent in the transaction or agreement. When acting in their individual capacity, the agent may be held personally accountable for certain actions, even if they are acting under the authority of the principal. It is essential to specify when an agent is acting in their individual capacity to avoid confusion about who is responsible for obligations and liabilities.
Understanding agent in its individual capacity through an example
Let’s say a real estate agent is representing a buyer in purchasing property. If the agent signs a contract with a third-party service provider for repairs or inspections in their individual capacity, they might be personally liable for any issues related to that contract, even though they are acting on behalf of the buyer. The agent may have personal responsibilities regarding the payment or completion of services, separate from their role as the buyer’s representative.
In another example, a business owner hires an agent to negotiate a contract on their behalf. If the agent signs a non-compete agreement in their own name rather than as an agent of the business, they could be personally bound by the terms of the agreement, even though they were negotiating for the company.
An example of an agent in its individual capacity clause
Here’s how an agent in its individual capacity clause might appear in a contract:
“The Agent shall act in its individual capacity with respect to the obligations set forth in this Agreement and shall be personally responsible for any actions or liabilities arising from such obligations.”
Conclusion
When an agent acts in its individual capacity, they are taking on personal responsibility for the actions or obligations in a contract, separate from their role as a representative of the principal. Clearly identifying when an agent is acting in their individual capacity ensures that all parties understand who is responsible for specific actions and liabilities, helping to avoid confusion and disputes.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.