Question

Jethro is in the process of assembling land for Ace contractors Ltd. to build a supermarket. He entered into a contract with the seller, Sam. He did not disclose that he was acting for someone else when he entered into the contract. Jethro failed to follow through with the terms of the contract he had with Sam.

b) Explain and discuss the legal principle involved in the case. What are Sam's rights when the contract is breached, and he learns that Jethro was acting for Ace?

Answer 1

b. Here Jethro is the agent of the undisclosed principal, Ace Contractors Ltd while contracting with the seller Sam. A principal is undisclosed when the third party did not know about his existence and here third party, Sam does not know about the existence of the principal other than Jethro when he entered into the contract. In such cases the third party can recover from either the agent or the principal. Hence in this case both Ace contractors and Jethro would become jointly and severely liable if the contract is breached. Hence Sam can recover the losses from either Jethro or Ace Contractors if the contract is breached and he learns that Jethro was acting for Ace.