It is common practise, mostly in the business world, for a contract to be entered into by an agent, acting on behalf of someone else, be it a juristic entity or a private person. This well-known principle is called the Law of Agency.
Agency occurs whenever a company concludes a contract. This is because a company is a juristic person, which has no corporeal existence, and can only act through individual mediators, called the agent.
An agent is not a party to the contract. When an agent enters into a contract, on behalf of another person or entity, known as the principal, the agent merely acts in a representative capacity.
Furthermore, an agent who enters into a contract on behalf of another person or entity does not give any promise that his principal is capable and/or willing to execute his obligations under the contract. However, the agent is regarded as having implicitly promised the other party that he had the necessary authority to enter into the contract and that the principal will be legally bound to the contract.
If it turns out that the agent did not have the necessary authority to represent the principal, then the agent can be liable to pay damages. In this regard the law does not necessitate that the other party to the contract be put in a better financial position than he would have been in if the agent did have authority. He can only demand to be put into the same financial position as he would have been in if the agent had the required authority.