Romeo is an engineer and owns RR Consulting.His wife,Carmen,though not actually involved in the company,often helps out around the office.One day,when Romeo is out and Carmen is alone in the office,an agent representing XYZ Construction comes in to contract Romeo's services.Carmen tells the agent that she is one of the owners of the company and that they would be willing to do the work.When he gets back,Romeo refuses the job.Who bears the liability?

Question

Quizplus · Accepted Answer

Carmen acted as if she was the principal of the company, even though she was not, and made an offer to do the work on behalf of the company. This is known as "apparent authority," which means that a third party reasonably believes that Carmen has the authority to act on behalf of the company. However, since Carmen does not actually have the authority to make such offers, she bears the liability for the offer made to XYZ Construction. Romeo, who is the actual owner and principal, is not liable because he did not authorize the offer made by Carmen. The agent representing XYZ Construction is not liable because they reasonably believed that Carmen had the authority to act on behalf of the company. XYZ Construction is also not liable because they did not act negligently in relying on Carmen's apparent authority.

Romeo Is an Engineer and Owns RR Consulting