What is the liability status of an agent who does not disclose the identity of the principal but acts on behalf of one?

In the scenario where an agent does not disclose the identity of the principal while acting on behalf of that principal, both the agent and the principal hold potential liability. The liability of the agent arises because they are acting on behalf of another entity without revealing the principal's identity, creating a situation of a partially disclosed principal.

When a principal is not disclosed, creditors may hold the agent responsible for the transaction since they interacted with the agent and not the principal directly. The law recognizes that third parties dealing with agents have the right to hold the agent liable if the principal is not disclosed. Simultaneously, the principal can also be held liable because, despite the agent acting without disclosing their identity, the agent is conducting business on behalf of the principal.

This dual liability exists to protect third parties in commercial transactions. Therefore, due to the nature of the relationship between the agent, the principal, and the third party, both the agent and the partially disclosed principal are likely to be held liable for the obligations arising from the contract made on behalf of the principal.