Liability of Principal
The principal is party to and is bound by contracts made by his agent with a third party within the scope of his express or implied authority. The third party can enforce the contract directly against the principal and vice versa.
The agency may be disclosed, but the identity of the principal may be undisclosed. In most cases, the fact that the third party does not object to the agent’s disclosure that he acts as is sufficient to indicate that he is willing to contract with the undisclosed principal and that the agent is not to be liable personally.
In the case of an ordinary commercial contract, such willingness of the other party may be assumed by the agent unless either the other party manifests his unwillingness or there are other circumstances from which the agent should realise that the other party was not so willing.
When an agent makes a contract for the principal without disclosing the agency, the undisclosed principal may be able to enforce the contract provided that it does not affect the other party’s interests. However, there are several limitations, which protect the third party who has contracted with the agent, without knowledge of the agency.
Status of Contract
Many of the same considerations arise in the case of undisclosed principals and undisclosed agency. There must be an existing competent principal. The agent must in fact act as such on his behalf.
The contract must have been made in the course of the agent’s actual authority. Apparent authority is not enough. There must be a prior agreement in relation to the agent’s authority.
Execution By Agent
A person who signs a legally significant document is presumed to be personally liable. A person who signs a document or executes a deed is liable as principal unless he states that he signs as agent or in the case of a deed, pursuant to a power of attorney.
Wrongs and Obligations
An agent can make his principal liable for civil wrongs. The existence of the agency will not usually excuse either agent or principal from statutory obligations and civil wrong/torts. An agent may not hive off civil liability arising from his own wrongs, by purporting to act, or in fact acting for, another.