ACCA Applied Skills · Corporate and Business Law (Global) · Agency law
Zara appoints Boris as her agent to buy machinery up to a value of 50,000. Boris, acting within his authority, signs a contract in Zara's name with Keldon Ltd, disclosing that he acts for Zara. Who is the party liable to Keldon Ltd on the contract?
Zara alone is liable. When an agent acts within actual authority and discloses the principal by name, the contract binds the principal and the third party directly, and the agent drops out without personal liability or rights.
- AZara only, as the disclosed principalCorrect
- BBoris only, as the person who signed
- CBoris and Zara jointly and severally
- DNeither, because the agent has no personal contractual role
Explanation
Where an agent acts within authority for a disclosed, named principal, the contract is between the principal and the third party. The agent drops out and has no personal liability. Making Boris liable ignores that he signed only as agent.
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