While an Agent Is Travelling in the United States on Sales

question 44

Multiple Choice

While an agent is travelling in the United States on sales calls, his principals-a husband and wife in partnership-die in an auto accident. He is informed of the deaths, and knowing that the children of the deceased, who are also active in the business will take it over, the agent signs a contract within his authority with a third party. Which of the following statements is true?

• A) The principals' estate must honour the contract.
• B) The children, on assuming ownership of the business, must honour the contract.
• C) The agent becomes liable on the contract.
• D) The third party can sue the agent for breach of warranty of authority.
• E) The principal is in breach of the agency agreement.

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