Agent Enters into a Contract with Third Party on Behalf

question 39

Multiple Choice

Agent enters into a contract with Third Party on behalf of Principal.Agent told Third Party that this contract was being entered into on behalf of someone else,but did not identify Principal to Third Party.A couple of weeks later,Principal disappears and Third Party wants to hold Agent to the contract.Third Party can:

• A)Not recover from Agent because Agent had disclosed the existence of Principal.
• B)Not recover from Agent because Third Party must first try to recover from Principal.
• C)Recover from Agent because Agent had a duty to ensure that Principal performed on the contract.
• D)Recover from Agent because Agent did not disclose the identity of Principal.
• E)Recover from Agent because Agent acted on behalf of an undisclosed principal.

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Definitions:

Present Value Amount

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Rate of Earnings

Measures the speed at which a company or an investment generates income relative to a certain amount of assets, capital, or equity.

Compound Interest

The process of calculating interest on both the primary amount of a loan or deposit and on the interest that has previously been accrued over time.

Net Present Value

A financial metric that calculates the present value of all future cash flows (both inflows and outflows) of an investment, discounted back at a specific rate.