How is a disclosed principal defined?

A disclosed principal is defined as one whose existence and identity are known to third parties involved in a transaction. This means that when an agent acts on behalf of a disclosed principal, the third parties are aware both that the agent is acting on behalf of someone else and who that person is. This level of disclosure is significant in agency law, as it allows third parties to know whom they are dealing with, which can affect liability, contract enforcement, and other legal implications.

In this context, if a transaction goes awry or if there are issues regarding payment or performance, the third party has the ability to seek recourse not just against the agent, but also against the known principal. Hence, an understanding of whether a principal is disclosed, partially disclosed, or undisclosed shapes the legal outcomes in various business dealings.