An Agent Negotiates a Contract with a Third Party for Which

question 8

Multiple Choice

An agent negotiates a contract with a third party for which the agent did not have express authority.Which of the following is true?

• A) The principal can never be held liable on the contract, because the agent exceeded his authority.
• B) The principal can be liable on the contract, but only if the agent had implied authority to enter into the contract.
• C) The principal can be liable on the contract, but only if apparent authority was present.
• D) The principal may not ratify the contract.
• E) The principal may ratify the contract, or the principal may be held responsible if the existence of either implied or apparent authority can be established.

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Definitions:

Import

Goods or services that come into a country from abroad for sale.

Consumer Surplus

The difference between the maximum price a consumer is willing to pay for a product and the actual price they do pay.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive, due to market prices being higher.

Total Benefits

The complete set of advantages, monetary or otherwise, received from the consumption or use of a good or service.