Lon is Mill Corporation's agent and is authorized to write checks on the firm's account in North Bank. Lon writes a check "pay to the order of Ocean Shipping." Lon signs the check "Mill Corporation by Lon, agent." The bank dishonors the check. Liability extends to
A)Lon.
B)Ocean Shipping.
C)Mill Corporation.
D)North Bank.

Question

Quizplus · Accepted Answer

Mill Corporation is liable for the check because Lon, as an agent of Mill Corporation, properly signed the check on behalf of the corporation. When an agent acts within the scope of their authority, the principal (in this case, Mill Corporation) is bound by the agent's actions.

Lon Is Mill Corporation's Agent and Is Authorized to Write