Lloyd v Grace, Smith and Co

Facts

A solicitors' managing clerk induced a client to transfer property to him and then dishonestly disposed of it for his own benefit.

Issue

Was the firm liable for its clerk's fraud, though it did not benefit?

Held

Yes. The clerk acted within the scope of his authority, so the firm was liable.

Principle

A principal is liable for an agent's fraud within the scope of his employment, even if done for the agent's own benefit.

Why it matters

It applies to companies as employers.

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