If an Agent Has No Authority but Nevertheless Contracts with a Third

question 52

True/False

If an agent has no authority but nevertheless contracts with a third party, the principal can be held liable on the contract even if the principal does not ratify the contract.

---

Definitions:

Administrative Expense

Costs related to the general administration of a business, such as salaries of executive officers and costs of the head office.

Direct Labour

The wages or salaries paid to employees directly involved in producing goods or providing services.

Variable Manufacturing Overhead

Costs that fluctuate with the level of production output, such as utilities and supplies used in the manufacture of a product.