Acme Corporation Is Being Sued by Howard Bank for $50,000

Multiple Choice

Acme Corporation is being sued by Howard Bank for $50,000 borrowed by Samantha, the Chief Financial Officer of Acme. Acme had granted a written authority to Samantha to borrow only $50,000. However, a week later, Samantha resigns from the company, and in the name of Acme, borrows an additional $50,000 for personal reasons. If Acme denies the liability of this debt and files a lawsuit against Samantha, which of the following is most likely to be the court's decision?

A) Acme will be excused from the liability based upon the fact that it had authorized Samantha only for $50,000.
B) Acme will be excused from the liability based upon the fact that Samantha was not an agent for Acme.
C) Samantha was not granted authority by Acme to enter into this specific transaction, hence Samantha will be held liable for a tort.
D) Samantha will be liable to pay the debt, since she did not take the loan for the benefit of the company.
E) Acme will have to pay the debt as it allowed Samantha to have apparent authority to borrow the additional amount.