Which of the Following Is True Regarding Liability of a Principal

question 63

Multiple Choice

Which of the following is true regarding liability of a principal if a contract an agent makes with a third party expressly excludes the principal from the contract?

• A) The principal is liable on the contract because it is unconscionable to exclude a principal from a contract.
• B) The principal is liable on the contract only if the principal is an unidentified principal.
• C) The principal is liable on the contract only if the principal is a partially disclosed principal.
• D) The principal is liable on the contract unless the principal gave the agent authority in writing to make the agreement with the third party.
• E) The principal is not liable on the contract.

---

Definitions:

Plane Operating Costs

The expenses associated with operating an aircraft, including fuel, maintenance, crew, and landing fees.

Variable Cost

A cost that changes in proportion with the level of output or activity.

Fixed Cost

Expenses that do not change with the level of output or sales, remaining constant even if the business activity varies.

Activity Variance

The difference between what was expected in terms of expenses or revenues for a particular activity level and what was actually realized.