8.An undisclosed principal a.has no liability. b.is bound to any contract proper
ID: 2532376 • Letter: 8
Question
8.An undisclosed principal
a.has no liability.
b.is bound to any contract properly made by his/her agent with a third party.
c.is liable under the UCC if a reasonable person under similar circumstances would find him/her liable.
d.may be subject to punitive damages for fraud.
9.Ratification
a.is an agent’s approval of actions taken by his/her principal.
b.must be in writing.
c.is a principal’s approval of his/her agent’s unauthorized act.
d.must be made within a reasonable time to be effective.
10.An agent’s implied authority
a.is not always present in a principal/agent relationship.
b.can cause additional liability to be imposed on the agent.
c.exists by virtue of being reasonably necessary to carry out the agent’s express authority.
d.can only be disclaimed by the principal, not the agent.
Explanation / Answer
8) An undisclosed principal
Solution: is bound to any contract properly made by his/her agent with a third party
Explanation: The undisclosed principal is bound by the acts undertaken by the agent within the defined actual authority.
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9) Ratification
Solution: is a principal’s approval of his/her agent’s unauthorized act.
Explanation: The effect of ratification is to make the principal liable for the agent's unauthorized action
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10) An agent’s implied authority
Solution: exists by virtue of being reasonably necessary to carry out the agent’s express authority
Explanation: In law of agency, implied authority (of the agent) can be conferred by custom, inferred from the position the agent occupies, or may imply by virtue of being reasonably necessary for carrying out express authority.
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