In certain cases, a third party can hold a principal to a contract even though the agent acted outside the authorization given him by his principal and even though his principal elected not to ratify the contract made by the agent.The third party can enforce the contract because of:

Question

Quizplus · Accepted Answer

The third party can enforce the contract under the concept of the agent's apparent authority. Apparent authority is based on the actions of the principal which made the third party believe that the agent was authorized to act in such a way. Even if the agent acted beyond the scope of their actual authority, the principal is still bound by the contract because of the apparent authority they gave their agent.

In Certain Cases, a Third Party Can Hold a Principal