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When an Agent Approaches a Third Party and Forms a Contract

Question 2

Multiple Choice

When an agent approaches a third party and forms a contract but fails to disclose his status,

A) the agency relationship is terminated since the agent did not represent himself properly.
B) the third party's recourse is against the principal as he is liable for all actions of the agent.
C) the principal is the victim of misrepresentation by the agent and the third party.
D) the third party's recourse is only against the principal as he is liable for performance of the contract.
E) the third party can exercise the option of either holding the principal or the agent responsible for performance on the contract.

Correct Answer: