When an agent who lacks a principal's authority executes a contract with a third party, the contract: ______.

Question

Quizplus · Accepted Answer

If an agent lacks the principal's authority, then any contract they execute with a third party is not binding on the principal. The agent is acting outside of their scope of authority, and therefore, the principal cannot be held responsible for the agent's actions. The third party may have legal recourse against the agent, but not against the principal.

When an Agent Who Lacks a Principal's Authority Executes a Contract