A principal whose existence and identity are known to the third party dealing with the agent is called what?

• A. Partially disclosed principal
• B. Disclosed principal
• C. Employee
• D. Independent contractor

Answer: (B)

In agency law, the level of disclosure matters for who is bound to contracts and who bears liability. A fully disclosed (disclosed) principal is someone whose existence and identity are known to the third party the agent is dealing with. When an agent acts for a disclosed principal within authority, the contract the third party makes is with the principal, not with the agent, and the principal is bound by the agent’s authorized acts. The agent typically isn’t liable to the third party for the contract itself, unless the agent misrepresents authority or acts without authority.

A partially disclosed principal is known to exist but the principal’s identity isn’t revealed to the third party, which can create different liability dynamics. An undisclosed principal means the third party doesn’t know the principal’s existence or identity. The other two options—employee or independent contractor—describe the agent’s relationship to the principal, not how much of the principal is disclosed to the third party.

So, the principal whose existence and identity are known to the third party is a disclosed principal.