Asked by Belinda Riojas on May 09, 2024
Verified
Which of the following is correct with regard to a contract entered into with a third person by an agent of an undisclosed principal?
A) The agent has no liability to the third person if the agent has acted within the scope of her authority.
B) The agent is personally liable upon the contract.
C) The undisclosed principal has no liability on the contract, even if her existence and identity are discovered by the third person.
D) If the third party obtains a judgment against the principal and the judgment is satisfied, the agent may still have liability to that third party.
Undisclosed Principal
A situation in contract law where an agent acts on behalf of a principal, but the identity of the principal is not revealed to the third party.
Personal Liability
An individual's legal responsibility to satisfy debts or obligations from personal assets, not just those tied to a particular venture or entity.
Scope of Authority
The range or extent of power that an individual or organization legally has to perform actions or make decisions.
- Recognize the implications of undisclosed, partially disclosed, and disclosed principals in contractual agreements.
- Illuminate the duties of agents in relation to contracts signed on behalf of principals that are either undisclosed or do not exist.
Verified Answer
AK
anshul kudroliMay 10, 2024
Final Answer :
B
Explanation :
In the case of a contract entered into by an agent on behalf of an undisclosed principal, the agent is personally liable to the third party. This is because the third party is unaware of the principal's existence at the time of the contract, and thus, the agent is the person with whom the third party believes they are entering into a contract.
Learning Objectives
- Recognize the implications of undisclosed, partially disclosed, and disclosed principals in contractual agreements.
- Illuminate the duties of agents in relation to contracts signed on behalf of principals that are either undisclosed or do not exist.