John Agent Entered into a Contract with Joe Third Party

question 82

Multiple Choice

John Agent entered into a contract with Joe Third Party to buy 50 stoves, payment to be made two weeks after John Agent picked up the stoves from Joe Third Party's warehouse. The stoves were picked up, but eight weeks later Joe still had not been paid. Joe found out that John Agent had been authorized to buy 50 stoves for Gord Principal. For some reason, John had not made it clear to Joe that he was acting as an agent, nor had he indicated that he was buying the goods for himself. Under the circumstances, which of the following is true?

• A) Third Party can successfully sue only Gord Principal.
• B) Third Party can successfully sue only John Agent.
• C) Third Party can successfully sue both Principal and Agent.
• D) Third Party can elect to recover from either Principal or Agent but not both.
• E) Third Party can ratify the contract with Gord.

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Definitions:

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which is typically not indicative of its market value.

Stated Value

A nominal value assigned by a company to its issued shares, which may be above or below the market value.

Shares

Units of ownership in a company, typically traded on a stock exchange, representing a portion of the corporate equity.

Treasury Stock

Shares that were issued and later reacquired by the issuing company.