If a principal is undisclosed, what is the effect on liability when a third party sues?

When a principal is undisclosed, it means that the other party involved in the transaction (the third party) is not aware that the agent is acting on behalf of a principal. In such cases, the third party cannot ratify the agent's actions after the transaction because they did not know that they were dealing with an agent.

The principle of ratification requires that the principal must be identifiable at the time the agreement is made for the third party to hold the principal liable later. Since the undisclosed principal is hidden from the third party at the time of the agreement, any attempt by the undisclosed principal to ratify the agent's actions would be ineffective. The third party has no means of knowing about the principal during the transaction, thus ratification cannot occur.

This concept illustrates why the correct answer is that there is no effective ratification when a principal is undisclosed. In contrast, the other options focus on different aspects of liability and authority that do not apply under the circumstances of an undisclosed principal.