Disclosed Principals, Contracts

Only parties to a contract can typically sue for breach of contract. Sometimes, though, there is uncertainty as to who is a party (or responsible for) a contract. Things can become confusing when there are principal-agent relationships in play.

A principal-agent relationship is where an agent — one person — acts on behalf of a principal — another person. Three elements must be present for there to be an agency relationship: (1) the principal must have the right to control the conduct of the agent with respect to matters entrusted to the agent; (2) the agent must be a fiduciary of the principal; and (3) the agent must be able to alter legal relationships between the principal and a third party. State ex rel. Ford v. Bacon, 63 S.W.3d 641, 642 (Mo. 2002). “A principal is responsible for the acts of her agent, as long as the agent is acting with actual authority.” Back v. Winfield-Foley Fire Protection, 257 S.W.3d 605, 608 (Mo. 2008).

In the context of contract law, ““an agent for a disclosed principal is not a party to a contract and is not liable for its nonperformance.” State ex rel. Ranni Assoc. v. Hartenbach, 742 S.W.2d 134, 140 (Mo. 1987). The exception to this rule is ““where the agent contracts in his own name, rather than on behalf of his principal.” Moore v. Seabaugh, 684 S.W.2d 492, 494 (Mo. Ct. App. 1984).