Corporate Liability for Acts of Agents and Representatives: Limits and the Duty of Supervision under Brazilian Business Law

This article analyzes the contours of corporate civil liability for acts committed by company agents and representatives, in light of the Brazilian Civil Code, current case law, and the principles of corporate theory. The focus lies on the limits of such liability, especially when acts exceed the authority granted, and on the employer’s duty to supervise the conduct of its agents. The systematic approach aims to clarify when a company is strictly liable for damages caused by its agents and the role of culpa in eligendo and culpa in vigilando in corporate liability.

Modern corporate theory recognizes the inevitable multiplicity of legal relationships maintained by a business entity. Within this context, the delegation of authority to employees, managers, officers, and attorneys-in-fact is a common practice that enables the legal entity to operate in the marketplace.

However, such delegation gives rise to a complex legal issue: the company’s liability for acts performed by its agents or representatives, particularly in situations resulting in harm to third parties. Brazilian civil law establishes strict liability in these cases, raising significant debate about the limits of attribution, the good faith of third parties, and the company’s duties of oversight and selection.

This article seeks to clarify the legal and doctrinal parameters that govern this form of liability, with emphasis on corporate law.

2. Legal and Theoretical Foundations

2.1 Brazilian Civil Code – Liability for Acts of Third Parties

The legal basis is found in Article 932, item III of the Civil Code:

"The following are also liable for civil reparation: (...) III – employers and principals, for acts of their employees, servants, or agents, carried out in the course of their work or as a result thereof."

This is complemented by Article 933:

"The persons indicated in the preceding article shall be liable for the acts of the third parties referred to therein, even if there is no fault on their part."

This provision imposes strict liability on the employer/principal, meaning that liability exists regardless of direct fault, provided the damage arises from acts performed in the scope of, or as a result of, the work performed.

3. Concept of Agent and Representative

An agent is any person who acts on behalf of the employer in performing delegated tasks—such as employees, managers, supervisors, drivers, customer service personnel, among others.

A representative or attorney-in-fact is a person formally vested with powers to represent the company, such as legal proxies or officers with specific authority (including partners).

What both roles share is that they act on behalf of the company and bind it legally before third parties—hence, their acts can give rise to civil liability for the company, including in cases of excess, when there is an apparent legitimacy of authority.

4. Limits of Corporate Liability

Corporate liability requires the presence of the following elements:

An act committed by an agent or representative;

Damage caused to a third party;

A functional link between the act and the company’s business activity;

Performance of the act in the course of or due to the work relationship.

Case law has established that companies may be held liable even for unlawful acts committed by their agents, when those acts arise from their role, even if they contradict internal company directives.

Example:

“The business entity is liable for moral damages caused by its employee to a consumer while performing their duties, even if the act contradicted internal orders.” (STJ, REsp 1.591.873/SP, Reporting Justice Nancy Andrighi, judged on 05/09/2017)

5. Culpa in Vigilando and Culpa in Eligendo

Doctrine recognizes two classical grounds for employer liability:

Culpa in eligendo (fault in selection): the negligent hiring of an agent (e.g., employing someone without proper qualifications or with a history of misconduct);

Culpa in vigilando (fault in supervision): failure to adequately oversee the agent’s actions, allowing harm to occur.

Although the Civil Code imposes strict liability on the company (eliminating the need to prove fault), analyzing these concepts remains relevant to qualify corporate conduct, potentially impact the amount of damages, or establish contributory negligence.

6. Exceeding Authority and the Good Faith of Third Parties

A company may also be held liable when an agent acts beyond their authority, if the following are present:

Appearance of legitimacy;

Good faith of the contracting or injured third party;

Functional connection between the agent and the company.

This results from the theory of appearance, widely adopted in Brazilian case law:

“The misconduct of an agent does not eliminate the company’s strict liability, provided the act was performed under the appearance of authority and generated legitimate reliance by the third party.” (TJSP, Civil Appeal No. 1007244-22.2021.8.26.0100, judged on 10/17/2023)

7. Final Considerations

Corporate liability for acts of agents and representatives reflects the theory of enterprise risk and the social function of economic activity. The legal system imposes on companies the duty to select, supervise, and assume responsibility for those acting on their behalf—even when the act was not explicitly authorized.

Preventive measures, such as compliance programs, internal controls, and employee training, are the most effective strategies to reduce legal risks and preserve corporate credibility.

Legal practitioners must understand that proving fault is not necessary to establish liability; it is sufficient to demonstrate a functional connection and that the act was carried out in the scope of work. This legal reality demands a technical and strategic perspective in advising businesses and representing victims of abusive conduct.