LEGAL PRINCIPLE: COMMERCIAL LAW — Agency — Liability of Agent Contracting in Own Name — Exception to Rule of Principal’s Liability
PRINCIPLE STATEMENT
The general law is that a contract made by an agent for a disclosed principal is the contract of the principal. However, if an agent in his name enters into a transaction, he can sue and be sued. An important exception is where an authorized agent makes the contract in his own name without disclosing he acted for another. He then becomes the real contracting party.
RATIO DECIDENDI (SOURCE)
Per Edozie, JSC, in Ataguba & Co. v. Gura Nig. Ltd (2005) NLC-2952000(SC) at p. 14; Paras A–C.
"Admittedly, the general law is that a contract made by an agent acting within the scope of his authority for a disclosed principal is in law the contract of principal, and the principal and not the agent is the proper person to sue or be sued upon such contract… But surely, if an agent in his name enters into a transaction with another, he can sue and be sued in respect of that transaction… A very important exception to the rule that an agent is neither entitled to sue nor liable to be sued on a contract made by him in a representative capacity is to be found where an authorised agent makes the contract in his own name without disclosing the fact that he was acting on behalf of another. On such contracts he can sue and be sued in his name because he is then to all appearances the real contracting party."
EXPLANATION / SCOPE
Agent acting for disclosed principal does not have personal liability or right to sue. Agent who contracts in own name without disclosing principal becomes personally liable and can sue. The principle applies to agency and commercial law. The rule protects third parties dealing with apparent principals. The undisclosed principal exception allows the agent to be treated as the real contracting party. The agent cannot later hide behind the principal after contracting in own name.
