Undisclosed Agency Agreement

From a legal point of view, the teaching of the undisclosed client states that when one party concludes a contract with another party and the first party is the duly authorised representative of a contracting authority, the contracting authority may itself enforce that contract. The same applies where the first party (agent) has not necessarily indicated, when concluding the contract of the other party (customer), that it has concluded a contract as an agent of a client. Another error in the law of freedom of choice lies in the « doctrine of fusion ». If an agent and his principal can be sued against a contract (according to the interpretation of the agency contract), the doctrine of the merger, according to RMKRM against MRMVL (1926), requires that the third party decide which of the two he wishes to pursue, he cannot sue both. If a judgment is rendered against the elected party, that judgment cannot be enforced (for example, if the defendant becomes insolvent or disappears), the third party cannot sue the other party. This happened in Priestly v Fernie (1863) and seems potentially very damaging to third parties simply because a judgment is binding on its pronouncement, unlike enforcement (normally in case of taking money). However, the law remains in force. Even if a lessee may enter into a lease on the assumption that the party with whom it holds a contract is the actual lessor, the validity of the lease is not affected by the fact that the latter party was not the true owner of the leased property, provided that the necessary P&A are in place. There is resistance to the idea that an agent can work for an unsused client.

Tehran-Europe vs. ST Belton (Tractors) [1968] however stated that the doctrine was justified on the basis of commercial comfort. The doctrine allows principals who would normally be refused as buyers or who would charge exceptionally high prices because of their identity, to use an agent to avoid this problem. A good example would be that a principal owned the whole country in a given territory, but for the third country; the third party would be aware of the value of this land for the client and would inflate its price accordingly. The doctrine follows the idea that identity is not normally essential to a contract, but there are some exceptions. Where an agent enters into a contract on behalf of an unnamed principal, the rights and obligations arising from this contract are between the agent and the third party (the agent does not withdraw as for the disclosed agency). However, this will change when the principle is discovered. Similarly, an agent is liable if he does not disclose the agency and the identity of the client during the conclusion of the contract. . . .