When an agent breaches an agency agreement, the right to avoid the contract can be exercised at the election of the principle.
The key to determining whether a principal is liable for contracts made by his agent is authority is was the agent authorized to negotiate the agreement and close the deal in which it would not be sensible to hold a contractor liable to pay for a whole load of lumber merely because a stranger wandered into the lumberyard saying, “I’m an agent for ABC Contractors; charge this to their account.” To be liable, the principal must have authorized the agent in some manner to act in his behalf, and that authorization must be communicated to the third party by the principal.
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