Cameron,a purported agent,signs a contract and promissory note to purchase a building for Burnstar Constructions,a purported principal.Though Cameron is an unauthorized representative,Burnstar Constructions likes the deal and accepts it.Which of the following is true of the deal ratified by Burnstar Constructions?
A) The deal is invalid due to the fraud in the inducement rule.
B) The deal is invalid due to the fraud in the inception rule.
C) Burnstar Constructions is liable on the note.
D) Cameron is liable on the note.

Question

Quizplus · Accepted Answer

When a principal accepts the benefits of a contract entered into by an unauthorized agent, the principal is bound to the contract. Therefore, Burnstar Constructions is liable on the promissory note, although Cameron, the unauthorized agent, is also potentially liable. The fraud in the inducement and fraud in the inception rules do not apply in this scenario.

Cameron,a Purported Agent,signs a Contract and Promissory Note to Purchase