CA Foundation Exam > CA Foundation Questions > What is an undisclosed agency?a)Where a third...
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What is an undisclosed agency?
- a)Where a third party is not informed of the existence of the principal and believes the agent is acting on his own behalf.
- b)Where the agent indicates through conduct he is acting as an agent.
- c)Where the principal is not in existence.
- d)Where the third party knows there is a principal but does not know his name.
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
What is an undisclosed agency?a)Where a third party is not informed of...
In a disclosed agency, the agent indicates expressly or through conduct that he is acting as an agent. The actual name of the principal need not be disclosed.
Where a third party is not informed of the existence of the principal and believes the agent is acting on his own behalf, is an undisclosed Agency.
Where a third party is not informed of the existence of the principal and believes the agent is acting on his own behalf, is an undisclosed Agency.
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What is an undisclosed agency?a)Where a third party is not informed of...
Understanding Undisclosed Agency
An undisclosed agency arises in situations where a third party engages with an agent without knowing that the agent is acting on behalf of a principal. This arrangement has specific implications and characteristics.
Key Characteristics of Undisclosed Agency:
- Agent's Autonomy: The third party believes the agent is acting independently, without the influence or direction of a principal.
- Legal Implications: The agent can bind the principal to contracts made with the third party, even if the third party is unaware of the principal’s existence.
- Risk of Liability: If the agent fails to meet obligations, the third party may only hold the agent liable, not the principal, due to the lack of transparency.
Comparison with Other Agency Types:
- Disclosed Agency: The third party is fully aware of the principal's identity and the nature of the agent's role.
- Partially Disclosed Agency: The third party knows that an agent is involved but does not know the principal's identity.
Conclusion:
In summary, option A accurately describes an undisclosed agency, where the third party is unaware of the principal's existence and assumes the agent is acting solely on their own behalf. This distinction is crucial in understanding the legal dynamics of agent-principal relationships and the responsibilities involved.
An undisclosed agency arises in situations where a third party engages with an agent without knowing that the agent is acting on behalf of a principal. This arrangement has specific implications and characteristics.
Key Characteristics of Undisclosed Agency:
- Agent's Autonomy: The third party believes the agent is acting independently, without the influence or direction of a principal.
- Legal Implications: The agent can bind the principal to contracts made with the third party, even if the third party is unaware of the principal’s existence.
- Risk of Liability: If the agent fails to meet obligations, the third party may only hold the agent liable, not the principal, due to the lack of transparency.
Comparison with Other Agency Types:
- Disclosed Agency: The third party is fully aware of the principal's identity and the nature of the agent's role.
- Partially Disclosed Agency: The third party knows that an agent is involved but does not know the principal's identity.
Conclusion:
In summary, option A accurately describes an undisclosed agency, where the third party is unaware of the principal's existence and assumes the agent is acting solely on their own behalf. This distinction is crucial in understanding the legal dynamics of agent-principal relationships and the responsibilities involved.
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What is an undisclosed agency?a)Where a third party is not informed of the existence of the principal and believes the agent is acting on his own behalf.b)Where the agent indicates through conduct he is acting as an agent.c)Where the principal is not in existence.d)Where the third party knows there is a principal but does not know his name.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about What is an undisclosed agency?a)Where a third party is not informed of the existence of the principal and believes the agent is acting on his own behalf.b)Where the agent indicates through conduct he is acting as an agent.c)Where the principal is not in existence.d)Where the third party knows there is a principal but does not know his name.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is an undisclosed agency?a)Where a third party is not informed of the existence of the principal and believes the agent is acting on his own behalf.b)Where the agent indicates through conduct he is acting as an agent.c)Where the principal is not in existence.d)Where the third party knows there is a principal but does not know his name.Correct answer is option 'A'. Can you explain this answer?.
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