Also known as:undisclosed principals · undisclosed agency
Written by attorneys · grounded in primary & secondary sources — see below
A principal for whom an agent acts when the third party has no notice that the agent is acting for a principal at the time of the transaction. The third party therefore believes it is dealing solely with the agent as an individual contracting on its own account.
Sources & Authorities
How it applies
Common Examples
3
Broker Books Shipment for Confidential Client
Uma Upadhyay, an independent freight broker, contacted United Bank to reserve cargo space. In her initial call Uma stated she was booking lanes for a confidential shipper but supplied no name. United Bank accepted the booking and completed the shipment. When the shipper failed to pay, United Bank sought recovery from the actual client. Because United Bank had no notice that Uma was acting for any principal, the client qualifies as an undisclosed principal and is liable on the contract.
Manager Orders Supplies in Own Name
Ugo Ucelli managed a tavern for Upland Industries but ran it under his own name at the owner’s direction. Ugo ordered cigars from Urban Logistics without revealing any principal. Urban Logistics delivered the goods believing it dealt only with Ugo personally. When payment was refused, Urban Logistics sued Upland Industries. The facts establish Upland Industries as an undisclosed principal because Urban Logistics had no notice of any agency relationship.
Put it into practice
Test Yourself
10
Practice Questions5
· 1 primary source
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Restatements
Casebooks
Hornbooks
Study Supplements
Dictionaries
Advisor Purchases Artwork Without Disclosure
Ursula Upton, an art adviser, negotiated the purchase of a sculpture from Uptown Apparel. Ursula told the gallery she was buying for a private collector but gave no name and signed the bill of sale only in her own name. After a defect appeared, the gallery sought to hold the collector liable. The collector had no notice given to the gallery of his existence as principal, making him an undisclosed principal on the contract.
Common questions
Frequently Asked
4
When is a principal undisclosed rather than partially disclosed?+
A principal is undisclosed when the third party has no notice at the time of the transaction that the agent is acting for any principal at all. The third party therefore assumes the agent is contracting solely on its own behalf. In contrast, 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.
Supporting sources
Is an undisclosed principal liable on the contract made by its agent?+
Yes. An undisclosed principal is liable on authorized contracts made by the agent just as a disclosed or partially disclosed principal would be. The agent is also a party to the contract because the third party believed it was dealing only with the agent.
Supporting sources
Can an undisclosed principal ratify an agent’s unauthorized act?+
Under the Second Restatement an undisclosed principal cannot ratify because the agent did not purport to act on the principal’s behalf. The Third Restatement permits ratification by an undisclosed principal when the actor acted or purported to act as an agent on the principal’s behalf.
Supporting sources
Does an undisclosed principal remain liable when the contract is in writing and names only the agent?+
Yes. An undisclosed principal may be liable on a simple contract in writing even though the writing purports to be the contract of the agent alone. The principal’s liability turns on the agent’s actual authority rather than the form of the instrument.
Supporting sources
Business Associations RelationshipsAgency and authority · CreationNEXTGENFoundational