What is Undisclosed principal?
In short
A principal is undisclosed when the third party doesn't know the agent is acting for anyone else. The agent is personally liable on the contract, and the principal is also liable once discovered.
Key takeaways
- The third party can choose to hold either the agent or the principal liable, but not both.
- The principal can generally enforce the contract, unless personal performance by the agent was essential.
- An agent who pays can seek reimbursement from the principal.
Where it's tested
REG: Business Law: Agency & Business Structures — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An agent who enters a contract on behalf of an undisclosed principal is: