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ACCA Applied Skills · Corporate and Business Law (Global) · Agency law

Ines appoints Jorge as agent to sell her goods. Jorge contracts with Kofi Ltd in his own name without revealing that he has a principal, and Kofi later discovers Ines is the principal. Which statement is correct?

Kofi Ltd may sue either Jorge or Ines once the principal is discovered, but it must choose. A clear election to pursue one generally prevents it from later suing the other, since it cannot recover twice for the same loss.

  1. AKofi Ltd may sue only Jorge, because Ines was undisclosed and cannot be liable
  2. BKofi Ltd may sue either Jorge or Ines, but once it elects to sue one it generally cannot sue the otherCorrect
  3. CKofi Ltd may sue both Jorge and Ines for the same loss at the same time and recover from each

Explanation

With an undisclosed principal, the agent is personally liable and the principal may intervene and be sued once discovered. The third party must elect between them, and a clear election to pursue one generally discharges the other. Recovering from both would give double recovery.

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