Question

In an undisclosed principal situation in which the agent does not have the authority to enter into a contract for real property and does so: a. only the principal is liable on the contract. b. the third party can elect to hold the principal or agent liable. c. only the agent is liable on the contract. d. none of the above

Answer 1

Answer:

a. only the principal is liable on the contract.

Explanation:

Under agency law, an undisclosed principal refers to a principal's use of an agent for negotiations with a third party who doesn't know/have the identity of the principal. In such situations the agent acts as though he is not functioning as an agent and is solely acting on his own

The United States law according to the Restatement (Third) of Agency 2.06, holds an undisclosed principal liable to a third party who detrimentally makes a change in position, even if the agent lacked authority to cause this change, and resting on the fact that the principal had knowledge of the agent's actions and did not take necessary actions.