On March 3, 2022, the First Department issued a decision in Bank of Am., N.A. v. ASD Gem Realty LLC, 2022 NY Slip Op. 01379, holding that an agent for an undisclosed principal was liable under a contract, explaining:
Generally, an agent who acts on behalf of a disclosed principal is not liable for a breach of contract. However, even an agent for a disclosed principal can be held personally liable for breach of contract if there is clear and explicit evidence of the agent’s intention to substitute or superadd his personal liability for, or to, that of his principal. The best indicator of that intent is the form of signature. Thus, where the agent signed two letter agreements “As Agent on Behalf of” a disclosed principal and the principal represented that the agent was authorized to sign on its behalf the agent was not liable for breach of contract.
Supreme Court correctly found that Sweet was not an agent for a disclosed principal. The clearest indicator of Sweet’s role, its signature, supports this conclusion. The signature line for “Sweet Construction Approval” and the signature do not indicate that Sweet signed the contract as agent on behalf of a disclosed principal or reflect any limitations.
The terms of the subcontract also support the court’s conclusion that Sweet was not acting as an agent for a disclosed owner. The language upon which Sweet relies to exculpate itself from payment obligation appears in the scope letter. In characterizing itself as only a facilitator of payment and merely a conduit Sweet ignores that the subcontract provides that the work is to be performed pursuant to the SCC General Requirements. Those requirements, which also appear in the scope letter, provide that Arenson will, inter alia, indemnify and hold Sweet harmless with respect to Arenson’s work; obtain liability insurance in Sweet’s favor; and recognize Sweet’s authority to issue safety violations and correct unsafe conditions. These general requirements, on their face, apply to Sweet in its own capacity, and not in its capacity as an agent.
Thus, as we did in Blandford Land Clearing Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa. (260 AD2d 86 [1st Dept 1999]), we reject Sweet’s attempt to divide a single contract into one that creates an agency for purposes of payment but not for any other purpose. Like the contract here, the subcontract in Blandford contained language providing that the contractor was the agent of the owner for purposes of payment. We rejected the surety’s argument that it had no obligations to pay the subcontractors because the contractor acted as the owner’s agent. We reasoned that the dual roles of general contractor and agent are inconsistent, and that a contractor cannot act as contractor for the purpose of directing plaintiffs’ work under the subcontracts and as agent for payment for the purpose of compensating plaintiffs’ efforts under those agreements without destroying the mutuality of obligation required to sustain a bilateral contract. Thus, as we found in Blandford, Sweet’s attempt to break out its payment obligation under the guise of agency while simultaneously retaining numerous other rights is merely a thinly disguised pay-when-paid provision that the Court of Appeals held to be void as against public policy in West-Fair Elec. Contrs. v Aetna Cas. & Sur. Co. (87 NY2d 148).
(Internal quotations and citations omitted).