1. Contract Ohligations.

В§ 163. Contracts by agent.

A contract made by an agent in behalf of his ])rincij)al may

be either: (1) made by the agent in the name of tiie ))rincipal

within the scope of a prior authority ; (2) made by the agent

In the name of the principal outside the scope of a prior au-

thority. iMit subsequently ratified ; (3) made by the agent in

the name of a foreign ])rincipal ; (4) made by the agent in his

own name. The rights of the principal vary in accordance

with those variations in the manner of forming the contract.

В§ 164. Contracts in the name of the principal.

(1) Authorized contracts. It is too clear to need demon-

stration that a contract made by an agent within his author-

Ity, real or apparent, which would bind the principal will also

LIABILITY OF THIRD PARTY. 213

bind the third party. This is in accordance with the estal>-

lished doctrines of the mutuality of contractual obligations.

In such a case the principal is both the real and nominal party

In interest and is the only one who can sue or be sued upon

the contract.^

(2) Ratified coyitracts. An unauthorized contract made in

the name of the principal and subsequently ratified stands

upon the same footing as one previously authorized. The

ratification exonerates the agent from liability, relates back to

the time of the formation of the contract, and creates all the

rights and obligations in favor of and against the principal,

which would have sprung from an authorized contract. Ac-

cordingly after a binding ratification ^ the principal is the only

one who can sue or be sued upon such a contract/^ It has

recently been held by the House of Lords in England that an

unauthorized contract made in behalf of an undisclosed prin-

cipal cannot be ratified by him so as to enable him to sue or

be sued upon it.*

(3) Contract for foreign principal. It is a rule of the Eng-

lish law that prima facie a principal resident in one country is

not a party to a contract made in another country, by his

agent resident tbere, and that he can neither sue nor be sued

upon it ; but the presumption may be overcome by showing

that the agent bad authority to pledge his principal's credit

and that tbe third party accepted the credit, thus establishing

a privity of contract between the third party and the princi-

pal.^ The rule of the American law is otherwise as will be

seen hereafter.^

В§ 165. Contracts in the name of the agent.

An agent may contract in his own name either : (1) for an

undisclosed principal ; (2) for a disclosed principal who, how-

1 Fail-lie v. Fenton, L. R. 5 Ex. 169; Sharp v. Jones, 18 Ind. 314;

Dicey on Parties to Actions, Rule 17.

2 Ante, §§ 31-44.

8 Ante, §§ 45-49 ; Ancona v. Marks, 7 H. & N. 686.

4 Keighiey v. Durant, 1901, App. Cas. 240.

6 Post, В§ 187,

6 Ibid.

214 PRIN'CirAL AND THIRD PARTY.

ever, is not named in the formal contract. Each case pre-

sents features involving the rights and liabilities of the

principal.

(1) Undisclosed principals. The rights and liabilities of an

undisclosed principal have already been considered. Subject

to the exceptions there enumerated the third person is liable

to the undisclosed principal in the same manner as if the

latter had been disclosed.^

(2) Unnamed principal. An agent may disclose his prin-

cipal and intend to make a contract in his behalf, l)ut fail of

this purpose by an omission to name the principal in the

formal instrument. In such a case if the instrument be a

simple contract the omission may be supplied and the princi-

pal may both sue and be sued upon the contract ; ^ but if the