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, the purported principal, 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 ratifies a contract that was entered into by an unauthorized agent, the principal becomes liable on the contract as if they had authorized it from the beginning. The fact that Cameron was an unauthorized representative is irrelevant because the principal, Burnstar Constructions, accepted and ratified the deal. Therefore, Burnstar Constructions is liable on the note. Neither of the fraud rules apply in this scenario.

Cameron, a Purported Agent, Signs a Contract and Promissory Note