Question

An agent is generally not liable on a contract when he or she does which of the following?

a) Agent contracts by deed in their own name

b) Agent does not disclose the existence of the principal

c) Agent discloses the fact that a principal exists but does not disclose the name of the principal

d) Agent contracts outside the scope of the authority they have been given

Answer 1

Solution:

An agent is generally not liable on a contract if he disclosed that he is an agent but not disclosed the name of principal to third party to the contract. The third party can proceed againt principal not against the agent for performance of the contract.

If agent contract in his own name or does not disclose the existence of principal, in that situation third party is not aware about existence of principal and can sue to agent for performance of the contract.

Therefore choice c is correct. "Agent discloses the fact that a principal exist but does not disclose the name of the principal"