Also known as: partially disclosed principals · semi-disclosed principal
Written by attorneys · grounded in primary & secondary sources — see below
A principal in an agency relationship when the third party knows that an agent is acting for some principal but lacks notice of the principal's identity. The principal remains liable on authorized contracts made by the agent.
Jordan, an investment adviser, negotiated a credit line with Riverbank. Jordan stated he was acting for a high-net-worth client but never revealed the client's name. The client, Lopez, later defaulted. Riverbank sues Lopez as a party to the loan. Lopez is liable because the bank had notice of a principal without knowing its identity.
Whitcomb negotiated a plumbing contract with Benjamin Plumbing on behalf of RHN. Whitcomb never disclosed that RHN was a corporation. Benjamin Plumbing had no notice of RHN's corporate identity. RHN is liable on the contract as a partially disclosed principal, and Whitcomb remains personally liable as well.
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A partially disclosed principal exists when the third party knows an agent is acting for some principal but does not know the principal's identity. A disclosed principal requires notice of both the agency and the principal's specific identity at the time of the transaction.
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Yes. A partially disclosed principal is subject to liability on contracts made by the agent acting within authority, provided the contract is in proper form and the understanding is that the principal is a party.
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No. The absence of the principal's name in the contract does not bar liability when the third party had notice that an agent was acting for some principal. The classification turns on the third party's knowledge at contracting, not on signature formalities.
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Yes. The agent of a partially disclosed principal is typically a party to the contract along with the principal unless the parties agree otherwise.
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