An Agent Who Makes a Contract for a Disclosed Principal

question 53

Multiple Choice

An agent who makes a contract for a disclosed principal whose contracts are voidable for lack of contractual capacity:

• A) is ordinarily personally liable to the third party if the principal avoids the contract.
• B) can be liable to the third party under certain circumstances.
• C) is never liable to the third party.
• D) is liable to the third party only if the agent warrants the principal has capacity.

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Definitions:

Useful Life

The estimated period over which a fixed asset is expected to be usable by the company, affecting its depreciation calculation.

Depreciation Percentage

The rate at which a company depreciates an asset, expressed as a percentage of its total value.

Double-Declining-Balance

An accelerated method of depreciation which doubles the usual rate of depreciation of assets, allowing for faster write-offs.

Units-Of-Output

A depreciation method that allocates the cost of an asset over its useful life based on the units it produces, reflecting the asset's wear and tear more accurately.