Under agency law, an undisclosed client is a person who uses an agent to negotiate with a third party who is not aware of the identity of the agent`s client. Often, in this type of situation, the officer claims to act for himself. As a result, the third party does not know how to look at the real client in a dispute.  Agency agreements are common in the business world if you want someone to act on your behalf. Much like someone with a power of attorney, an agent is in a particular type of relationship with you, the sponsor, because the agent must act in your best interest. While the client and agent often use an agency agreement to define the terms of the agency, the agreement is also based on trust, as the client will not hire an agent they do not trust. The law itself, which can be traced back to the reign of Lord Tenterde de Thompson v Davenport in 1829, but ultimately formalized somewhat differently from Parke B to Heald v Kenworthy in 1855, suggests that there is an agency relationship, but if it is not revealed at all, the counterparty may sue the agent or (if his identity appears later) the sponsor. An unmentioned investor becomes a party to a transaction only if it is proven that the agent intends to enter his account. When an agent acts on his own behalf without disclosing the adjudicator`s authority, he does not exclude the responsibility of the client.
The unknown agency could be imitated by using an agent and creating privity or using a reseller, but since the agency was developed by the common law long before the privity issues were detected, it is assumed that this is why an undisclosed agency exists. A trader would also put the “principle” at greater risk. The P-A structure authorizes the sale of assets for which a transaction would not otherwise be possible. For example, a customer may not be able to afford to buy the goods or they can better manage their working capital by not issuing their money. An agreement offers the customer the right to use the goods as part of the rental by a financier, the client of the P-A agreement. In the disclosed agency, the agent is authorized to reveal the identity of his client. This was said in Harper v Vigors Bros (1909). A contract is concluded between the third party and the client, which is concluded by a representative in a disclosed agency situation. After the termination of the contract, the representative “breaks down” and omits all rights and obligations between the third party and the client.