What defines an Undisclosed Principal?

An Undisclosed Principal is defined as a principal whose identity and existence are unknown to a third party involved in a transaction. In this scenario, the agent acts on behalf of the principal without revealing the principal's information. This can occur in various business transactions where the agent represents the interests of the undisclosed principal while maintaining confidentiality.

The implications of this arrangement are significant, as the third party only interacts with the agent. If any issues arise, the third party may have limited recourse against the principal since they were unaware of the principal's role in the transaction. This concept is vital in real estate and agency law because it delineates the responsibilities and potential liabilities of the parties involved.

In contrast, when a principal is fully known to all parties, or when their intentions are clear, or if they only communicate through an agent, these situations do not fit the definition of an Undisclosed Principal. Understanding these distinctions is essential in the realm of agency law and real estate transactions, as it influences the rights and duties of each party involved.