An agent is not liable for making an unauthorized contract if:
A)the third party does not know that the agent lacks authority.
B)the principal fails to subsequently ratify the contract.
C)the agent does not notify the third party that he does not warrant his authority to contract.
D)the third party actually knows that the agent lacks authority.

Question

Quizplus · Accepted Answer

An agent is not liable for making an unauthorized contract if the third party actually knows that the agent lacks authority.The agent still is liable where the third party merely had reason to know that authority was lacking.

An Agent Is Not Liable for Making an Unauthorized Contract