Cook Instructs Chan, Her Agent, to Buy a Van for Her

question 60

Multiple Choice

Cook instructs Chan, her agent, to buy a van for her business. Chan contracts for a van with a third party, who knows that Chan is an agent. If Cook does not like the van and refuses to pay for it, the seller may sue:

• A) Chan because she did not have authority to enter into a final contract without permission
• B) Cook because Chan has actual authority to make a contract on behalf of her principal
• C) Cook if Chan signed the contract expressly on behalf of Cook; that is, the principal was revealed before the contract was made
• D) Cook but only if Chan has apparent authority to enter into the contract
• E) no one; there was no valid contract

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Definitions:

Apparent Authority

Refers to a situation where a third party correctly believes that an agent has the power to act on behalf of a principal, even if the agent does not have the actual authority.

Capital Contributed

The amount of money or assets that owners, partners, or shareholders have invested in a company or partnership.

Partnerships

A business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed.

Voting Rights

Legal rights established to protect individuals' abilities to participate in the electoral process, ensuring their votes are cast and counted accurately.