What happens if an agent does not disclose their agency status to a third party?

When an agent does not disclose their agency status to a third party, the agent can become personally liable for the obligations arising from the contract. This principle stems from the notion that when acting on behalf of a principal, an agent has a duty to inform third parties about their role. If the agency is not disclosed, the third party may assume that the agent is acting in their own capacity rather than on behalf of another.

Because the third party is unaware of the existence of an agency relationship, they may be misled into believing that they are dealing directly with the agent. As a result, if any issues arise from the contract, the agent can be held accountable as if they were the contracting party. This liability emphasizes the importance of transparency in agency relationships and serves to protect third parties who rely on the representations made by the agent.

In this context, other options do not correctly reflect the legal implications of an undisclosed agency. For instance, the principal would not automatically be held liable for the contract because the agent’s lack of disclosure prevents the establishment of the principal-agent relationship in the eyes of the third party. Additionally, the agent cannot be absolved of liability nor can the third party be deprived of enforceable rights solely because of the agent's failure