A recent High Court judgment has highlighted the importance of clear drafting to exclude or limit the possibility of parties seeking remedies for breach of contract as 'undisclosed principals'.
In MSH v HCS 2025 [2025] EWHC 815 (Comm) the Court clarified that the burden on the parties seeking to establish undisclosed principal status is not necessarily a 'heavy one'. In this article we examine the Court's decision and its application of the undisclosed principal doctrine.
The facts
The case arises from MSH’s challenge to an arbitral award which found that HCS was a party (as an undisclosed principal) to a contract for the sale and purchase of Colombian nut coke, a mineral used in iron and steel production. MSH was the named seller, and CTW was the named buyer, but HCS argued it was the actual buyer acting through CTW as its agent. HCS was an established customer of CTW, and their business model involved HCS providing the financing (such as by opening lines of credit) for goods that CTW sourced on its behalf, including the nut coke in question.
The issues
The question for the court (amongst others) was whether HCS was a party to the contract as the undisclosed principal of CTW. A central issue was whether the right to be an undisclosed principal was impliedly excluded by the contract's terms.
MSH relied on four clauses to attempt to prove that HCS was not an undisclosed principal and that the only party capable of suing MSH under the contract was CTW, the named buyer:
- a clause identifying HCS as the party providing the letter of credit;
- a clause which precluded assignment without the other party's prior written consent;
- a clause to keep the agreement confidential; and
- an 'entire agreement' clause.
The decision
The judgment considered the Court of Appeal decision in Kaefer v AMS Drilling, which had endorsed the findings in Aspen [2018] EWCA Civ 2590 where the Court held that although identifying contracting parties by name is evidence against the existence of an undisclosed principal, it doesn't necessarily rule out the possibility.
Additionally, the Court considered the judgment in Kaefer, where Green LJ stated that 'Where there is an entire agreement clause this is evidence which tends to negative any suggestion that a party intended to sue or be sued by a person other than the named counterparty' but wasn't convinced by this point, noting that parties could (and should) expressly state they are the only parties with rights and remedies under the contract.
The court rejected MSH's submissions. First, it ruled that the clause identifying HCS as the party providing the letter of credit was, contrary to MSH's contention, evidence that HCS was more likely to be an undisclosed principal than not.
The court further held that a clause limiting assignment and a confidentiality clause do not hold much evidential weight when determining whether the doctrine of an undisclosed principal is impliedly excluded.
The most noteworthy discussion, however, was in relation to the 'entire agreement' clause. These clauses are common boilerplate clauses in the majority of contracts, intended to supersede any prior or separate negotiations and to limit disputes as to what terms have been incorporated. MSH argued that the inclusion of such a clause clearly demonstrated the parties' intention that no other agreements (including any agreements giving rise to an agency-principal relationship) could be incorporated under the contract for sale of the nut coke.
The court decided, however, that this was not always the case. Instead, it held that the evidentiary weight of an entire agreement clause (in relation to the doctrine of undisclosed principals) depends on both the nature and circumstances of the contract and the wording of the clause itself. The clause can be significant where there are strong commercial reasons to suggest that a third party should be a party to a contract (or vice versa). In this case, the contract clearly contemplated someone other than the named signatory was to be involved in the payment mechanism given the clause naming HCS as the grantor of the letter of credit.
The four clauses relied upon by MSH, when considered together, did not sufficiently demonstrate that the doctrine of an undisclosed principal was excluded and the Court found that HCS was duly authorised and intended to be the buyer, with CTW acting as its agent. Accordingly, MSH's challenge failed.
Practical implications
This ruling underscores that, even when a contract names specific parties and includes entire agreement clauses (and other boilerplate provisions), an unnamed party may still be deemed an undisclosed principal if the underlying facts support an agency relationship. The Court will look at the reality of how the parties operate and finance the deal, rather than only at the formal wording of the contract.
From a drafting perspective, if parties wish to prevent undisclosed principals from acquiring rights, they should include unequivocal language confirming:
- that each party contracts solely on its own behalf and not as an agent or on behalf of any undisclosed principal; and
- that no other party (identified or otherwise) may enforce the contract’s terms.
Such express language can be decisive in avoiding the “surprise” appearance of an undisclosed principal. Absent such explicit terms, entire agreement clauses or similar provisions will not, in themselves, exclude the long-established common law doctrine of undisclosed principals.
MSH v HCS EWHC 815 (Comm) – the judgment is available here.
