Authority of Agent to Bind Principal

Question 1

When can an agent bind a principal to a contract?

Answer 1

An agent may bind a principal to a contract if the agent is acting within his actual or apparent or inherent agency power.

Question 2

Is a principal liable via agent signing a contract?

Answer 2

Once a principal is validly bound to a contract by his agent, the principal is liable under the terms of the contract.

Question 3

What is a disclosed principal?

Answer 3

A principal is disclosed if a third party dealing with the agent knows or has reason to know of the agency relationship and the principal’s identity.

Question 4

Is a disclosed principal liable for contracts entered into by an agent? Is the agent liable?

Answer 4

YES, and agent is not personally liable.

Question 5

What is a partially disclosed principal?

Answer 5

A principal is partially disclosed if a third party dealing with an agent knows or has reason to know that the agent is acting on a principal’s behalf but doesn’t know the principal’s identity.

Question 6

Are partially disclosed principals liable for contracts entered into by an agent? is the agent liable?

Answer 6

Yes
and Yes

Question 7

What are undisclosed principals?

Answer 7

A principal is undisclosed if a third party dealing with an agent has no notice of the fact that the agent is acting for a principal at all, let alone the principal’s identity

Question 8

Are undisclosed principals liable for contracts entered into by an agent? Is the agent liable?

Answer 8

Both are liable if agent has actual authority
If agent does not have actual authority, only agent is liable.