A Comparative Study on Tortious Liability of Agent and Principal in Undisclosed Agency in Iranian and English Legal Systems

The undisclosed agency is a kind of agency in which the identity of principal is concealed in the contract concluded between the agent and the third party and the latter conceives the agent is the real and genuine party in the contract. This kind of agency, as an exception to the general rules of contracts, was, for the first time, introduced in the English law of 18th century. Because, as we know, under the law of contracts, only the parties to a contract are liable for performing the contractual undertakings and the principal is a stranger and has no liability for the privity of contract. But the undisclosed agent bears the liability of principal not on contractual bases but on a tortious one. In the law of Iran, the matter of undisclosed agency has solely but impliedly been referred to in Art.196 of the Civil Code while this legal institution has long precedent in the Islamic jurisprudence and the views expressed by the Islamic jurists. Since, under the general law of agency, all acts and words of the agent are attributed to and for the principal and this may cause many losses to the third person ignorant of the presence of the principal, the present study is intended to elucidate the tortious liability of the agent and principal in such a manner that, in this direction, various legal and Islamic jurisprudential bases for tortious liability of them, such as the rule of deceit, estoppels and causation will be examined. Thus, the study will make it clear that, under the theory of undisclosed agency, not only the principal but also the agent is liable for compensating the probable losses incurred by the third party. It will also be proved that it the acts of the agent and principal if accompanied with mala fides may be counted as examples of the crime of conspiracy or fraud and punishable as such.