Pronunciation: prin - suh - pal
Definition: a person who has the main responsibility for an obligation and may allow another person, i.e. agent, to act on his or her behalf
A "principal" is an individual or entity that has the ultimate authority to make decisions and/or take responsibility for certain legal actions. A principal also may allow another person – called an "agent" – to act on behalf of the principal. When an agent acts on behalf of the principal, the principal generally will remain liable for the agent’s actions or omissions.
Obviously, outside the context of law, a "principal" can be defined as the head of a school, while a "principle" is a basic doctrine, belief and/or tenet about something. However, in the law, a "principal" is a person who has the ultimate authority to make a decision and may allow another person, i.e. agent, act on behalf of him or her.
Let’s go over an example to show how the term principal applies in a legal context.
Principal – Example
Assume that Billy owns Billy’s Bar and hires Owen as a bouncer. Owen signs an employee contract to work at Billy’s Bar and the contract states that Owen may "physically remove patrons of Billy’s Bar who engage in violence or otherwise threaten the safety of anyone at Billy’s Bar."
Here, Billy is the principal and Owen is an agent for Billy. That’s because Owen may act on behalf of Billy to keep order at Billy’s Bar.
One night, Alex comes to Billy’s Bar and drinks too much alcohol. Alex attempts to start a fight with another person at the bar. Owen sees Alex try to punch another person. So, Owen grabs Alex, picks him up, and throws him out of Billy’s Bar. Alex lands on the sidewalk and injures his head. Alex later goes to the hospital and has to get a few stitches on the side of his head.
Alex finds a plaintiff’s lawyer who is willing to represent him and files a lawsuit against Billy’s Bar, Billy, and Owen for the injuries that Alex suffered as a result of being thrown out of the bar by Owen. Alex can legally file a claim against Billy alleging that Billy acted as the principal of Owen. Alex can also obviously file a suit against Owen for Owen’s actions. So, what will happen?
Well, hopefully, Billy and Owen will be able to successfully defend against the lawsuit and argue that Owen acted reasonably in defense of other people at the bar. However, if Alex successfully wins the lawsuit, then Billy and Owen may have to determine who should own the liability for Alex’s injuries.
Owen will likely argue that he was just doing his job and shouldn’t be liable for anything. Billy may argue that Owen acted outside the scope of his employment because Billy did not authorize Owen to throw patrons on the sidewalk. Here, the scope of the relationship between Owen and Billy will determine what happens.
Please read about agents and/or the article Agency Law
for further details on agents – which obtain their authority from their principals.