Legal Definitions - disclosed principal

A disclosed principal refers to a situation in an agency relationship where a third party, interacting with an agent, is fully aware of the principal's identity. In other words, the agent makes it clear to the third party not only that they are acting on behalf of someone else, but also precisely who that "someone else" is.

When a principal is disclosed, it generally means that the principal, rather than the agent, is legally bound by the contracts or agreements made by the agent within the scope of their authority. This clarity helps establish direct legal ties between the principal and the third party.

Here are some examples illustrating a disclosed principal:

• Real Estate Transaction: Imagine a real estate agent, Mr. Henderson, is negotiating to purchase a commercial property. He informs the seller's agent that he is representing "Horizon Development Group" and provides the company's official details. In this scenario, Horizon Development Group is the disclosed principal because the seller's agent (and thus the seller) knows exactly which entity Mr. Henderson is acting for. If a purchase agreement is reached, Horizon Development Group, not Mr. Henderson personally, will be legally obligated to complete the transaction.

• Business Procurement: Sarah works as a purchasing manager for "Innovatech Solutions Inc." When she contacts a new vendor to order a large quantity of custom-designed circuit boards, all her communications—emails, purchase orders, and phone calls—clearly state that she is acting on behalf of Innovatech Solutions Inc. and include the company's official letterhead and contact information. Innovatech Solutions Inc. is the disclosed principal. The vendor is fully aware that Sarah is an agent for the company, and therefore, Innovatech Solutions Inc. will be responsible for payment and any contractual terms, not Sarah personally.

• Talent Representation: An agent, Ms. Chen, is booking a speaking engagement for a renowned motivational speaker, Dr. Evelyn Reed. When Ms. Chen contacts the event organizer, she explicitly states that she is Dr. Reed's representative and discusses Dr. Reed's fees, availability, and technical requirements. Dr. Evelyn Reed is the disclosed principal. The event organizer knows precisely which individual Ms. Chen is representing, meaning Dr. Reed will be the party obligated to deliver the speech and receive payment under the contract, not Ms. Chen.