ABSTRACT
INTRODUCTION This chapter is concerned with the scope of an agent’s authority and when a principal will be liable, or be able to sue, on a contract made by the agent without authority. The different types of authority must be understood, in particular, apparent authority (sometimes known as ‘ostensible’ authority) and usual authority. Furthermore, students must pay sufficient attention to the important concept of the doctrine of the undisclosed principal. The general rule is that an undisclosed principal can sue and be sued on the contract made by the agent on his behalf, if it was within the scope of the agent’s actual authority. The justification for the doctrine of the undisclosed principal has been the subject of much discussion by academic writers. It is generally accepted that, although it runs against the fundamental principles of privity of contract (that is, there must be agreement between the parties), the doctrine is justified on grounds of commercial convenience.
