What characterizes an "undisclosed agency"?

An undisclosed agency occurs when the third party is unaware that the agent is acting on behalf of a principal. In this situation, the third party perceives the agent as acting independently rather than representing someone else's interests. As a result, the relationship between the agent and the principal is not disclosed to the third party, leading to the misconception that the agent is operating on their own.

This distinct characteristic can significantly impact the legal consequences of the transactions made during the agency relationship. Since the third party believes they are contracting directly with the agent, they may not have the same protections or claims against the principal if an issue arises.

In contrast, the other options highlight characteristics of different agency relationships. In a disclosed agency, the identity of the principal is known, which is not the case in an undisclosed agency. If an agent acts without authority, it typically does not establish an agency relationship at all, and the agent does not have the ability to bind the principal in transactions. Lastly, having full authority implies that the agent is empowered to act on the principal's behalf, which is contrary to the nature of an undisclosed agency where the agent is perceived to act independently.