Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199
Agency; undisclosed principals; an undisclosed principal's right to enforce a contract.
Facts: A shipping agent obtained insurance from the Eastern Insurance Co on behalf of the owners of a ship. Two crew members of that ship were accidentally killed and the administrator of their estates sued the insurance company for the compensation due under the policy of insurance. The insurance company denied liability arguing that when filling out the forms to apply for the insurance cover, the shipping agent had put its own name down as the insured party, rather than the name of the shipowners. The shipowners were therefore in the position of undisclosed principals.
Issue: Were the shipowners entitled, despite being an undisclosed principal, to enforce the insurance contract against the insurance company?
Decision: There were no circumstances to indicate that the shipping agent was intended to be the true principal of the contract of insurance. The contract could therefore be enforced by the shipowner (and its employees).
Reason: Sometimes the agreed terms of a contract, or the particular circumstances of the case, will operate to prevent an undisclosed principal from suing or being sued under an agreement. This includes, for example, where there is no admissible evidence as to the identity of the principal, or if the contract precludes the possibility of an undisclosed principal. But in the absence of such terms or circumstances, and particularly in ordinary commercial contracts, an undisclosed principal may sue on a contract made by an agent acting within the scope of its actual authority, provided the agent intended to act on the principal’s behalf.