Asked by Emily Gellis on Jul 11, 2024
Verified
When an agent, acting within the scope of his or her authority, contracts with a third party, a disclosed principal is liable to the third party.
Disclosed Principal
A principal whose identity is known to a third party at the time the agent makes a contract with the third party.
Liable
Legally responsible or obligated, often in reference to the duty to compensate for harm or loss caused by one's actions or omissions.
Scope of Authority
The scope of authority delineates the range of actions or decisions that an individual or entity, such as an employee or agent, is officially empowered to make on behalf of another party or organization.
- Contrast disclosed, partially disclosed, and undisclosed principals with respect to their financial responsibilities.
Verified Answer
DN
Dayang NurzawanieJul 12, 2024
Final Answer :
True
Explanation :
When an agent acts within their authority and contracts with a third party on behalf of a disclosed principal (meaning the third party knows the identity of the principal), the principal is liable to the third party for the obligations arising from the contract.
Learning Objectives
- Contrast disclosed, partially disclosed, and undisclosed principals with respect to their financial responsibilities.