In MPC LTD v. New Mexico Taxation and Revenue Department, 2003-NMCA-021, the New Mexico Court of Appeals interpreted the state's regulation on this exclusion to require 1) the agent have the authority to bind the principal to an obligation created by the agent, and 2) the beneficiary of that obligation must be informed by contract that he or she has a right to proceed against the principal to enforce the obligation. In this hearing, the Taxpayer failed to establish a "disclosed agent" relationship, as it provided no proof that the temporary employees or the Franchisee's clients knew that they had a right to proceed against the Franchisee.
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