The Principal May Hold the Third Party to a Contract

question 331

Multiple Choice

The principal may hold the third party to a contract, in an undisclosed principal situation, except when the:

• A) undisclosed principal is expressly excluded as a party to the contract between the agent and the third party
• B) agent's performance is personal to the contract
• C) contract, when a negotiable instrument, does not include the identity of the principal or existence of the agency relationship
• D) undisclosed principal is expressly excluded as a party to the contract between the agent and the third party or the agent's performance is personal to the contract
• E) undisclosed principal is expressly excluded as a party to the contract between the agent and the third party or the agent's performance is personal to the contract or the undisclosed principal is expressly excluded as a party to the contract between the agent and the third party or the agent's performance is personal to the contract

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Definitions:

NPV Estimates

Calculations used to determine the Net Present Value of an investment, forecasting the difference between the present value of cash inflows and outflows.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase its profits by increasing sales, given its fixed costs.

Scenario Analysis

A process of analyzing possible future events by considering alternative possible outcomes (scenarios), thus helping in the decision-making process.

Net Present Value

A calculation that compares the value of all cash inflows and outflows of a project or investment, discounted back to their present value.