It is possible that an unselected client may be found to be a third party. The basic rule is that a third party should not be disadvantaged by the disclosure of the client. After the revelation, a contractor “takes over” the contract and assumes rights and obligations in place of the agent. The agent will be down. However, the client can only resume the contract as it was. The difficulty arises when an agent (with the undisclosed client) enters into a contract with a third party and the consideration of the third party is the discharge of the representative`s existing debt. If an undisclosed client takes over this contract, what will happen to the agent`s debts, and can the principal be able to ask the third party for money because he has had to make debts to lighten the load? The rule that a third party should not be disadvantaged by the revelations would indicate that the client could take over the contract, but that he could not ask for money instead of debt relief. But Greer v Downs Supply Co (1927) acted differently, denying the existence of an undisclosed sponsor, because the agent`s guilt made the agent`s identity a contract. It is argued that if the result (the non-disability of the third party) is correct, there is no reason for a debt to make identity material; the client could have taken over the bond contract (i.e. he would have to agree with the agent to get the extra money). In Siu Yin Kwan v.
Eastern Insurance Co , the Privy Council found that an undisclosed principle could still be pursued if a debt was owed to the third party, but that agent (company) had been liquidated. If, subsequently, such a true capital chief is formed, he should recognize the so-called agency and the opposing party should accept it to leave the agent off the hook. It would be a kind of novation. The officer is acting on behalf of someone else called Principal. The client authorizes the agent to act on his behalf and under his direction. The representative represents the client in his dealings with third parties. The relationship between the client and the agent may be disclosed or not disclosed to the third party.