In certain cases, a third party can hold a principal to a contract even though the agent acted outside the authorization given him by his principal and even though his principal elected not to ratify the contract made by the agent. The third party can enforce the contract because of
A) the reasonable agent theory.
B) agency by express agreement.
C) the failure of the principal to register the agency agreement.
D) the agent's apparent authority.
E) fiduciary duty.

Question

Quizplus · Accepted Answer

The agent's apparent authority allows a third party to hold a principal to a contract even if the agent acted outside their given authorization, as long as the third party reasonably believed the agent had the authority to act on behalf of the principal.

In Certain Cases, a Third Party Can Hold a Principal