Undisclosed agent
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Brokerage Anatomy™
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A charlatan, basically. The kind of knave who tells you, after having concluded a transaction with you, that he is in fact acting as agent for someone else, in doing so trying to claim he is not himself principally liable for the legal consequences of what he has done.
Don’t believe a word of it. An agent who doesn’t tell you he’s an agent is a principal. Well — effectively, anyway.
Possible agency scenarios
Here are the possible “undisclosed agency” scenarios at the time of contract:
- Fully disclosed agency: Principal has appointed agent, agent has disclosed agency, agent has disclosed principal.
- Undisclosed principal: Principal has appointed agent, agent has disclosed agency, agent has not disclosed principal.
- Undisclosed agency: Principal has appointed agent, agent has not disclosed agency, agent has not disclosed principal.
- Full principal: Principal has not appointed agent, agent has not disclosed agency, agent has not disclosed principal. (i.e., a fellow who claims ex post facto to have been an agent is better known as a “liar”).
The actual law — which you can trace back as far as Lord Tenterden’s rule from Thompson v Davenport in 1829 but finally formalised somewhat differently by Parke B in Heald v Kenworthy in 1855, suggests that there is an agency relationship, but the if it isn’t disclosed at all the counterparty can choose to sue the agent or (if its identity subsequently emerges) the principal.
This makes sense where the contract involves property belonging to the undisclosed principal, such as the sale of a unique asset. Here the agent has no right to deal with that asset at all except as an agent — nemo dat quod non habet — so for the contract to be meaningful for an innocent purchaser, the law must recognise some agency.
Amwell J — a bear with little brain and even less persuasive impact on the courts of England and Wales — says this is all pap, and insists an agent who neglects to mention his agency at the time of striking a bargain is simply a principal (and a bounder). If you want authority for that statement, take yourself back to your very first contract law lecture, the one which outlined the essential ingredients of a bargain: offer, acceptance and consideration. The terms, as offered and accepted, bind. If the “agent” made no mention of his “agency”, it is not a term of the contract, and he is yours, fully liable as principal, to throw into the snarling teeth of the common law of contract. It would simply not do if an agent were able to avoid liability by subsequently announcing existence of some other poor sap to carry the can.
If such a benighted real principal does subsequently emerge, it would have to acknowledge the purported agency, and the counterparty would have to accept it, to let the agent off the hook. That would be some kind of novation.
The case law seems to have developed the other way around — to enable an aggrieved principal who actually did exist, to seek performance of the bargain from the third party. But again, its action should not be against the ipso facto inadvertent third party but against the delinquent agent. and if the agent should be of insufficient means? Well — tough. It was the principal who decided to employ him.
Anus matronae parvae malas leges faciunt
Undisclosed principal
This should be contrasted with the fellow who tells you in good time he’s an agent, all right, but just not for whom. More about that fellow can be found here (in short, though, he too is effectively liable as principal (even if technically still an agent), at least until he’s told you who his client is).
See also
- Agent
- Principal
- Riskless principal
- Undisclosed agent (a.k.a. knave)
- Undisclosed principal