Which of the following is true with regard to contractual relations between the principal and a third party?
A) There is no liability on the part of the principal if the agent acts with implied authority.
B) An undisclosed principal and the third party are contractually bound if the agent acts within her actual authority,unless the contract specifies otherwise.
C) Under the Second Restatement,no principal is bound if the agent acts without any authority.
D) A partially disclosed principal is bound only if the agent acts within the scope of actual authority.

Question

Quizplus · Accepted Answer

According to the doctrine of implied authority, if an agent acts within her actual authority or the authority that the principal appears to have given her, then the principal is contractually bound to a third party. If the principal is undisclosed, then the third party is also bound. However, if the contract specifies otherwise, then the principal may not be bound. Option A is incorrect because the principal may still be liable even if the agent acts with implied authority. Option C is incorrect because the Second Restatement recognizes the concept of apparent authority. Option D is incorrect because a partially disclosed principal is bound by the acts of the agent within the scope of both actual and apparent authority.

Which of the Following Is True with Regard to Contractual