What kind of agency is formed when a third party knows the agent is acting on behalf of a principal and knows the principal's actual identity?

A fully disclosed agency is established when both the agent and the principal have a clear relationship that is known to a third party. In this scenario, the third party is aware that the agent is acting on behalf of a principal and also knows the principal's actual identity. This transparency allows the third party to understand who is responsible for any agreements or contracts that may arise from the agent’s actions.

In a fully disclosed agency, the principal is directly liable for the acts of the agent within the scope of the agent's authority. This clarity helps facilitate trust and outlines the responsibilities involved, making it clear that any dealings are with the principal rather than the agent personally.

The other forms of agency involve scenarios where either the principal or the agent’s identity is not entirely clear to the third party, which can lead to different legal implications regarding liability and authority. However, in a fully disclosed agency, all parties involved have a mutual understanding, which simplifies the legal framework and potential issues that could arise.