When officers act as agents for the corporation and a third party is aware of some restriction on the officer's authority, then the third party
A) would need to require the contract to be placed under seal.
B) needs to do nothing, since it's up to the corporation to control and regulate their officer's acts.
C) will be bound by such restrictions.
D) can still claim he is relying on apparent authority.
E) can ignore the common law rules of agency.

Question

Quizplus · Accepted Answer

When an officer acts as an agent for the corporation and a third party is aware of some restriction on the officer's authority, the third party will be bound by such restrictions. This is based on the principle that third parties dealing with agents have a duty to make reasonable inquiry into the agent's authority and are charged with knowledge of any limitations on that authority of which they have notice.

When Officers Act as Agents for the Corporation and a Third