Cengage Advantage Books: Essentials of Business Law 5th Edition by Jeffrey Beatty,Susan Samuelson

Exercise 7

CPA QUESTION Cox engaged Datz as her agent. It was mutually agreed that Datz would not disclose that he was acting as Cox's agent. Instead, he was to deal with prospective customers as if he were a principal acting on his own behalf. This he did and made several contracts for Cox. Assuming Cox, Datz, or the customer seeks to avoid liability on one of the contracts involved, which of the following statements is correct
(a) Cox must ratify the Datz contracts to be held liable.
(b) Datz has no liability once he discloses that Cox was the real principal.
(c) The third party can avoid liability because he believed he was dealing with Datz as a principal.
(d) The third party may choose to hold either Datz or Cox liable.