Legal Definitions - adverse-agent doctrine

The adverse-agent doctrine is a legal rule that states that if an agent is engaged in fraudulent activities that are concealed as part of the fraud, the agent's knowledge will not be imputed to the principal.

For example, if a company's sales representative is secretly taking kickbacks from a supplier, the company cannot be held responsible for the representative's actions because the representative was acting against the company's interests.

Another example would be if a lawyer is representing a client in a lawsuit and the lawyer engages in fraudulent activities, such as falsifying evidence or lying to the court. The client cannot be held responsible for the lawyer's actions because the lawyer was acting against the client's interests.

The adverse-agent doctrine is important because it protects principals from being held responsible for the actions of agents who are acting against their interests. It also encourages principals to trust their agents and delegate authority, knowing that they will not be held responsible for any fraudulent actions taken by the agent.