Asked by Erika Lansang on Jun 22, 2024
Verified
Which of the following is true if an agent has no actual or apparent authority to act on behalf of a principal but the agent still enters into a contract with a third party?
A) The principal is bound,but only if the principal is a disclosed principal.
B) The principal is bound,but only if the principal is an unidentified principal.
C) The principal is bound,but only if the principal is a partially disclosed principal.
D) The principal is bound,but only if the principal is a disclosed or partially disclosed principal.
E) The principal is not bound unless the principal ratifies the contract.
Apparent Authority
The appearance or assumption of authority based on the actions of the principal, leading others to believe that an agent has the power to act on behalf of the principal.
Actual Authority
The express and implied powers granted to an agent by the principal.
- Analyze situations where agents act beyond their authority and the legal impact on the principal and third parties.
Verified Answer
TB
Travis BàndJun 28, 2024
Final Answer :
E
Explanation :
If an agent has no authority to act on behalf of a principal but the agent still enters into a contract with a third party,the principal,regardless of the classification,is not bound to the contract unless the principal ratifies the agreement.
Learning Objectives
- Analyze situations where agents act beyond their authority and the legal impact on the principal and third parties.