{"id":12151,"date":"2018-01-16T05:32:46","date_gmt":"2018-01-16T05:32:46","guid":{"rendered":"https:\/\/reunitethestates.org\/?page_id=12151"},"modified":"2018-03-10T05:21:46","modified_gmt":"2018-03-10T05:21:46","slug":"principal-the-person-for-whose-debt-or-default-a-surety-is-responsible-under-a-contract-of-suretyship","status":"publish","type":"page","link":"https:\/\/reunitethestates.org\/?page_id=12151","title":{"rendered":"principal – the person for whose debt or default a surety is responsible under a contract of suretyship"},"content":{"rendered":"

\u00a0\u00a0\u00a0\u00a0 This page is continued from Legal Instruments<\/a> >>>> Negotiable Instrument<\/a> >>>> Maker<\/a> >>>> Surety<\/a>:\u00a0<\/span> <\/strong><\/p>\n

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principal<\/span>:<\/span><\/span><\/strong>
\n adj<\/em>.<\/span><\/p>\n

1. Of the first importance.\u00a0 In the first rank.<\/strong> [1]<\/span><\/p>\n

1. Of the first importance; in the first rank; chief; main.<\/strong> [2]<\/span><\/p>\n

principal<\/span>:<\/span><\/span><\/strong>
\n noun<\/em>.<\/span><\/p>\n

1. Someone who has primary responsibility on an<\/span> obligation<\/a>, as opposed to a surety<\/a> or indorser<\/a>.<\/span><\/strong> [1]<\/span><\/span><\/p>\n

1. In an agency relationship<\/a>, the person for whom another acts and from whom he derives authority to act.<\/span> 3 Am J2d Agency \u00a7 1<\/span>. <\/span><\/strong><\/span><\/p>\n

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In <\/span>bail and recognizance \u2014 the person released on bail.<\/span> 8 Am 12d Bail \u00a7 1<\/span>. <\/span><\/span><\/strong><\/p>\n

The party to a<\/span> suretyship<\/a> who enters into the main contract with the<\/span> obligee<\/a>, the one who is directly interested in and benefited <\/span><\/span>by the main contract, and the one to whom or from whom the consideration for the main<\/span> obligation<\/a> flows.<\/span> 50 Am J1st Suret \u00a7 3<\/span>.<\/span> <\/span><\/strong><\/p>\n

In <\/span>guaranty<\/a>, the person whose obligation is covered by the undertaking<\/a> of the guarantor<\/a>.<\/span> 24 Am J1st Guar \u00a7 29<\/span>. <\/span><\/span><\/strong>[2]<\/span><\/p>\n

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1. The amount of money loaned or borrowed, as distinguished from interest accruing on the debt.<\/span><\/strong><\/span><\/p>\n

2. In an agency relationship<\/a>, the person for whom the agent acts an from whom the agent received her authority to act.<\/span><\/strong><\/span>
\n \u00a0\u00a0\u00a0\u00a0 See undisclosed principal<\/em>.<\/span><\/p>\n

3. The corpus of a trust.<\/span><\/strong><\/span><\/p>\n

4. The person for whose debt or default a surety<\/a> is responsible under a contract of<\/span> suretyship<\/a>.<\/span><\/span><\/strong><\/p>\n

5. The person whose obligation is guaranteed by a guarantor<\/a> under contract of guaranty<\/a>. <\/strong><\/span>[3]<\/span><\/p>\n

Various Types of Principals:<\/span><\/strong><\/p>\n<\/div>\n

apparent principal<\/span> –<\/strong> (1847) Someone who, by outward manifestations, has made it reasonably appear to a third person that another is authorized to act as the person’s agent.<\/strong><\/span><\/p>\n

disclosed principal<\/span><\/strong> – (1856) A principal of whose identity a third party has knowledge or notice at the time an agent interacts with the third party on behalf of the principal.\u00a0 *\u00a0 A disclosed principal is always liable on a contract entered into by the agent with the principal\u2019s authority, but the agent is usually not liable.<\/strong><\/span><\/p>\n

partially disclosed principal<\/span> –<\/strong> (1934) A principal whose existence \u2014 but not actual identity \u2014 is revealed by the agent to a third party.<\/strong><\/span><\/p>\n

undisclosed principal<\/span> –<\/strong> (1835) A principal whose identity is kept secret by the agent; a principal for whom the other party has no notice that the agent is acting. 0 An undisclosed principal and the agent are both liable on a contract entered into by the agent with the principal\u2019s authority.\u00a0 This doctrine is unique to common-law agency and is not recognized by civil-law doctrine.<\/strong>\u00a0 Cf. undisclosed agent<\/em> under AGENT. \u2018<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0 Excerpt from\u00a0Francis B. Tiffany, Handbook of the Law <\/em><\/a>of Principal and Agent<\/em> 5 90, at 251 -52 (Richard R.B. Powell ed., 2d ed. 1924):<\/span><\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0 \u201cIn the cases of undisclosed principal, T. has dealt with A., believing A. to be the principal and intending to contract with A., the person before him.\u00a0 Later it is discovered that A. was really intending to act as agent of P. What are the liabilities and rights of P., A., and T. under these circumstances?\u00a0 Between the cases of disclosed and undisclosed principal there is an intermediate group of cases which may be called those of \u2018unnamed\u2019 principal.\u00a0 In these T. knows that A. represents some one, but does not know the identity of P. it can readily be seen that the rules applicable to this intermediate group of cases will differ from those applicable to either of the other groups.\u00a0 The conferring of rights and liabilities upon the \u2018undisclosed\u2019 or \u2018unnamed\u2018 principal is one of the unique features of the law of principal and agent. in a suit by P. against A., or by A. against P., there is no change of legal relation because P. was undisclosed or unnamed to T.<\/span>\u201d<\/strong> [4]<\/span><\/p>\n

unidentified principal<\/span> –<\/strong> (1926) A principal whose identity is unknown to a third party when the agent and the third party interact.\u00a0 *\u00a0 An agent for an unidentified principal who makes a contract on the principal\u2019s behalf is subject to liability on the contract, as is the principal.<\/strong> \u2014 aka partially undisclosed principal<\/span><\/strong><\/em>; unnamed principal<\/span><\/strong><\/em>.<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0 Excerpt from Restatement (Third) of Agency<\/em> 5 1.04 cmt. b (2006):<\/strong><\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0 \u201cThe terms \u2018partially undisclosed principal\u2019 and \u2018unnamed principal\u2019 are synonyms for \u2018unidentified principal.\u2019\u00a0 The terminology \u2018unidentified principal’ is preferable.\u00a0 \u2018Partially disclosed\u2019 misleadingly suggests that some portion of the principal\u2019s identity is known to the third party.\u00a0 \u2018Unnamed principal\u2019 is too restrictive because a third party may know the principal\u2019s identity but n . t know the principal\u2019s name.<\/span>\u201d<\/strong> [5]<\/span><\/p>\n

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2. Someone who has primary responsibility on an obliga~ tion, as Opposed to a surety or indorser. 4. The corpus of<\/span><\/p>\n

an estate or trust. 5. The amount of a debt. investment, or other fund, not including interest, earnings, or prohts.<\/span><\/p>\n<\/div>\n

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References:<\/span><\/span><\/strong><\/p>\n

Disclaimer:<\/span><\/span><\/strong> All material throughout this website is compiled in accordance with Fair Use<\/a><\/span><\/strong>.<\/strong><\/p>\n

[1]: Black\u2019s Law Dictionary\u00a0Deluxe Tenth Edition\u00a0by Henry Campbell Black & Editor in Chief Bryan A. Garner<\/a>. ISBN: 978-0-314-62130-6<\/span><\/strong><\/p>\n

[2]: Ballantine\u2019s Law Dictionary\u00a0<\/a><\/span><\/strong>with Pronunciations
\n<\/span><\/em>Third Edition<\/span><\/strong><\/a>\u00a0by James A. Ballantine\u00a0<\/span><\/strong>(James Arthur 1871-1949).\u00a0\u00a0<\/span><\/em>Edited by William S. Anderson.\u00a0\u00a0\u00a9 1969 by THE LAWYER\u2019S CO-OPERATIVE PUBLISHING COMPANY.\u00a0 Library of Congress Catalog Card No. 68-30931<\/span><\/strong><\/p>\n

[3]: Ballantine’s Law Dictionary <\/a><\/span><\/strong>Legal Assistant Edition<\/span><\/a><\/em>
\nby Jack Ballantine\u00a0<\/span><\/strong>(James Arthur 1871-1949).\u00a0\u00a0<\/span><\/em>Doctored<\/span><\/a><\/strong>\u00a0<\/span><\/em>by\u00a0Jack G. Handler,\u00a0J.D.<\/a>\u00a0\u00a9 1994 Delmar by Thomson Learning.\u00a0 ISBN 0-8273-4874-6.<\/span><\/strong><\/p>\n

[4]: Francis B. Tiffany, Handbook of the Law <\/em><\/a>of Principal and Agent<\/em> 5 90, at 251 -52 (Richard R.B. Powell ed., 2d ed. 1924).<\/span><\/strong><\/p>\n

[5]: Restatement (Third) of Agency 5 1.04 cmt. b (2006).<\/span><\/strong><\/p>\n

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