Legal Definitions - doctrine of election

The doctrine of election is a legal principle that applies when a person enters into a contract with an individual who is secretly acting as an agent for another person or company (known as the principal). If the person who made the contract (the third party) later discovers the identity of this previously hidden principal, they are faced with a choice.

Under this doctrine, the third party must decide whether to hold the agent or the principal responsible for fulfilling the terms of the contract. They can pursue legal action or enforce the contract against either the agent or the principal, but they cannot pursue both simultaneously for the same contractual obligation.

• Example 1: Business Supply Contract

  Imagine a small bakery owner, Sarah, wants to purchase a large quantity of specialty flour. She negotiates a deal with a local supplier, Mark, who presents himself as an independent vendor. Unbeknownst to Sarah, Mark is actually an agent for a much larger, national food distribution company (the principal) that prefers to operate through local representatives without disclosing its involvement upfront. After receiving a shipment of substandard flour, Sarah investigates and discovers that Mark was acting as an agent for the national distribution company.

  How it illustrates the doctrine: Sarah now faces an election. She can choose to sue Mark, the agent she directly contracted with, or she can choose to sue the national food distribution company, the principal whose identity was revealed later, for breach of contract regarding the flour quality. However, she cannot sue both Mark and the national company for the same damages related to that single contract.

• Example 2: Property Management Agreement

  Consider David, a property owner, who hires a local property manager, Lisa, to find tenants and manage his rental apartment. Lisa presents herself as an independent contractor. Later, David discovers that Lisa is actually an agent working for a larger, corporate property management firm (the principal) that operates under various local names. When issues arise with tenant payments and property maintenance, David learns the full extent of Lisa's agency.

  How it illustrates the doctrine: David must now make an election. He can choose to pursue legal action against Lisa, the individual property manager he dealt with, or he can choose to pursue the larger corporate property management firm, the principal, for any breaches of the management agreement. He cannot hold both Lisa and the firm liable for the same contractual failures.

• Example 3: Custom Software Development

  A startup company, "InnovateTech," contracts with a freelance software developer, Alex, to build a custom application. Alex operates as a sole proprietor and doesn't disclose that he is actually working as an agent for a larger, established software development agency (the principal) that often takes on projects through individual contractors to manage workload. Midway through the project, significant delays and technical problems emerge. InnovateTech then uncovers that Alex was acting as an agent for the larger agency.

  How it illustrates the doctrine: InnovateTech must now elect whom to hold accountable. They can choose to sue Alex, the individual developer they contracted with, or they can choose to sue the larger software development agency, the principal, for the project delays and technical issues. They cannot seek compensation from both Alex and the agency for the same contractual breaches.