Exam 20: Relationship With Third Parties

Ann, in the presence of Betty, tells Thomas that Ann is Betty's agent.In reality, Ann had no authority.Betty hears the statement, but she says nothing.In reliance, Thomas ships goods to Betty on Ann's order.Betty is liable even though no actual authority existed.

Under the Third Restatement, an agent who represents an undisclosed principal is discharged from liability if:

If Sierra orally requests her agent Scott to sell her desk for at least $450, Scott's authority to sell the desk for this amount is actual and express.

An agent for an unidentified principal is liable on the contract to the third party no matter whether the particular transaction is authorized or not.