An Undisclosed Principal exists when an agent makes a contract with a third party without disclosing the fact that they are acting as an agent. The third party believes they are contracting directly with the agent in their personal capacity.
Legal Consequences (Sections 231 & 232):
Agent’s Liability: The agent is personally liable to the third party.
Principal’s Rights: The undisclosed principal can intervene and require the performance of the contract.
Third Party’s Rights: If the third party discovers the principal, they can choose to sue either the agent or the principal (or both).
Equities: The principal can only enforce the contract subject to the rights and obligations existing between the agent and the third party (e.g., if the third party had a right of set-off against the agent, they retain it against the principal).
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