Jason Manufacturing Company wished to acquire a site for a warehouse. Knowing that if it negotiated directly for the purchase of the property the price would be substantially increased, it employed Kent, an agent, to secure lots without disclosing that he was acting for Jason. Kent’s authority was evidenced by a writing signed by the proper officers of Jason. Kent entered into a contract in his own name to purchase Peter’s lot, giving Peter a negotiable note for $1,000 signed by Kent as first payment. Jason wrote Kent acknowledging the purchase. Jason also disclosed its identity as Kent’s principal to Peter. In respect to the rights and liabilities of the parties, which of the following is a correct statement?

• Jason, Kent, and Peter are potentially liable on the contract.

• Kent has no liability since he was acting for and on behalf of an existing principal.

• Peter is not bound on the contract since Kent’s failure to disclose he was Jason’s agent was fraudulent.

• Unless Peter formally ratifies the substitution of Jason for Kent, he is not liable.

Wiley says option 2 is correct but I thought that when a principal discloses to the 3rd party their identity, the agent is released from liability??

Sorry, I said option 2, Wiley says option 1.

agents are liable for authorized deals and contracts unless the 3rd party discovers the identity of the principal and CHOOSES to hold the principal liable

only way to release an agent is with a novation