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Law Notes 4:25:12

Contract liability of disclosed principal situation 1

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Contract Liability of Disclosed Principal Situation 1 : Selling real estate, but buyer knows that the seller is an agent. Agent sells for $425k when principal wanted at least $400k. Even though signing as agent, signing on behalf of principal. If either party breaches contract, it is just between the principal and third party (not the agent). ??????? Situation 2 : What if agent wasn’t authorized to do something? Sells property for $375k. Buyer has no idea about the minimum. Principal is stuck with the contract. Agent must indemnify principal – didn’t breach contract but breached agency. Buyer - good faith buyer – didn’t know about minimum . Contract is valid. Principal must collect $375k and sue agent. Situation 3 : Buyer knew there was a $400k restriction; principal is off the hook. Agent has no authority whatsoever. Contract Liability of Unidentified Principal Agent cannot disclose information in regard to who the principal is. Come the time of closing, principal doesn’t want the agreement, but can’t say anything. Agent says principal doesn’t want to give contract. Buyer sues principal, but doesn’t know the name. Asks agent, but agent cannot disclose information. Therefore, buyer sues the agent for damages. Agent goes out of pocket. Principal is obligated to pay for compensation/damages. Contract Liability of Undisclosed Principal Agent cannot say they are working for principal at all. Buyer thinks he is only dealing with agent. Agent must take all legal bullets. Apparent authority doesn’t exist here – b/c nobody knows that there is a principal . You either have authority or you don’t.
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4/25/12 1) Why would anyone go through the trouble of hiring agents and not instructing them to disclose who they are at all or not even say they work for anyone? The disclosure of principal’s identity may affect the price of arrangement – Walt Disney Example
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