CPA · Question 14 · Area II: Business Law
A principal hires an agent to manage a retail business. The principal instructs the agent not to purchase inventory from Vendor X. However, the agent purchases inventory from Vendor X, who is unaware of the restriction. The principal has previously paid for inventory purchased by the agent from other vendors. Is the principal liable on the contract with Vendor X?
Answer options:
No, because the agent lacked actual authority.
Yes, because the agent had apparent authority.
No, because the contract was unauthorized.
Yes, but only if the principal ratifies the contract.
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