Also known as: disclosed principals · identified principal
Written by attorneys · grounded in primary & secondary sources — see below
A principal in an agency relationship for whom an agent acts when the third party has notice both of the agency and of the principal's identity at the time of the transaction. The principal becomes a party to the authorized contract made by the agent.
Destiny Davis, a freelance engineer, met with a sales manager at Titan Hardware to order servers. She stated during negotiations that she was placing the order for her client QuantumRetail Inc. Titan accepted the order after hearing the name. QuantumRetail Inc. qualifies as a disclosed principal and faces direct liability on the contract.
Farmers sold grain to Warren, an elevator operator. Cargill had financed Warren and directed its grain purchases. The court found that Cargill was the disclosed principal of Warren because the farmers knew Warren acted for Cargill. Cargill therefore shared liability with Warren on the farmers' contracts.
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A principal is disclosed when the third party receives notice at the time of the transaction both that the agent acts for a principal and of that principal's specific identity. Notice of the principal's existence alone produces only partial disclosure.
No. The classification turns on what the third party is told at the time of contracting, not on the agent's later choice of email or signature. Explicit statements identifying the principal control.
A disclosed principal is a party to the contract and is subject to liability on it when the agent acts within authority. The agent ordinarily drops out of the transaction.
Prior oral statements that identify the principal satisfy the notice requirement even if later drafts name only the agent or leave the buyer line blank. The earlier actual notice remains effective at the time of the transaction.