John agreed to build a new house for Ted.Unknown to John,Ted was an agent for Russell Realty.John built the house as agreed.When Ted refused to pay,John became aware that Ted was an agent for Russell.John wants to sue on the contract.Under the Second Restatement,John:
A) must sue Ted,because Ted is the person with whom he dealt.
B) can collect judgments against Ted and Russell.
C) must sue Russell,because Russell is the principal.
D) can sue either Ted or Russell.

Question

Quizplus · Accepted Answer

Under the Second Restatement of Agency, when an agent enters into a contract on behalf of a disclosed or partially disclosed principal, the agent and the principal may both be held liable. Since John was unaware that Ted was acting as an agent for Russell Realty, but later discovered this fact, he has the option to sue either Ted (the agent with whom he directly interacted) or Russell Realty (the principal on whose behalf Ted was acting).

John Agreed to Build a New House for Ted