Without Ted's knowledge, Phil, who frequently purchased lumber on Ted's behalf, purchased a large quantity of plywood from Chris as agent for Ted. Phil later advised Ted of the purchase. As an agent, Phil must make certain that his principal is in existence at the time the contract is negotiated, otherwise, he would be liable for breach of warranty of authority.

Principal

The main party involved in a financial transaction or agreement, such as the amount of money borrowed in a loan, or a primary actor in a contract.

Implied Warranty

A legal concept that guarantees that a product or service sold will perform as expected, even if not explicitly promised by the seller.

Authority

The capacity or entitlement to direct actions, decide outcomes, and command adherence.