Jacob, on behalf of Red Manufacturing Company (Red), entered into a contract with Thomas Equipment, Inc

Accounting Aug 07, 2020

Jacob, on behalf of Red Manufacturing Company (Red), entered into a contract with Thomas Equipment, Inc. (Thomas). Under the contract, Red agreed to sell TV components to Thomas. Jacob told Thomas that he was working on behalf of Red. Jacob has exceeded his actual authority by entering into this contract with Thomas. If Red does not want to honor the contract with Thomas, it will nonetheless be liable to Thomas if Thomas can prove that:

A. Jacob believed he was acting within the scope of his authority.

B. Jacob was an independent contractor for Red.

C. Jacob had apparent authority to bind Red to the contract.

D. The agency relationship between Jacob and Red was formalized in a signed writing.

Expert Solution

Correct option is C : Jacob had apparent authority to bind Red to the contract.

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