When is a principal not liable for an agent's actions during an auction?

The correct answer is that a principal is not liable for an agent's actions during an auction if the agent informs the third party of the agency relationship. When an agent clearly communicates their status as a representative of the principal, it sets the expectations for the third party and helps ensure that the agent's actions and any resulting liabilities can be traced back to the principal in an appropriate manner. This transparency protects the principal from unrecognized obligations or liabilities incurred by the agent, as it establishes a clear framework within which the agent operates.

In contrast, if the agent acts outside their authority, the principal may still be held liable for the agent's actions when those actions can be reasonably attributed to their position, as third parties might believe the agent is still acting in the principal's interest. Similarly, if the agency relationship is not disclosed, the principal could also be seen as liable since the third party is unaware that they are dealing with an agent rather than directly with the principal. Conducting the auction online does not inherently affect the liability of the principal regarding the agent's actions, as liability is more about the relationship dynamics and clear communication rather than the medium by which the auction is held.