Civil Code section 2295 provides: “An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.”
Under California law, agency is not presumed. One must prove its existence to assert as a defense. The burden of proving the existence of an agency rests on the one affirming its existence. (Burbank v. National Casualty Co. (1941) 43 Cal.App.2d 773, 781.) To prove its existence, one typically must prove an agreement to act on one’s behalf: an agency must rest upon an agreement. (D’Acquisto v. Evola (1949) 90 Cal.App.2d 210, 213.) The “agreement” need not be in writing or recorded in any way; it can be implied. “Agency may be implied from the circumstances and conduct of the parties.” (Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1579.) However, the extent of the “agreement” must be sufficient to reach the level of agency. One who performs a mere favor for another without being subject to any legal duty of service and without assenting to right of control is not an agent, because the agency relationship rests upon mutual consent. (Hanks v. Carter & Higgins of Cal., Inc. (1967) 250 Cal.App.2d 156.)
Once established, agents may sign contracts for disclosed, undisclosed and partially disclosed principals. If an agent signs a contract for an undisclosed or partially disclosed principal, both the agent and the principal are liable on the contract, though the plaintiff must elect to take a judgment against just one. Disputes arise when the parties disagree whether the agent’s principal was fully disclosed or partially disclosed. In these cases, the defendant has the affirmative burden to plead the defense of agency and to prove that the plaintiff had actual knowledge of the true identity of the principal at the time the contract was signed. If the burden is met, then defendant-agent is excused, and the plaintiff can only seek action against the defendant-principal.