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An agency relationship exists between Bill, and Trucks o' Plenty, a trucking firm that he founded five years before and of which he is currently the CEO
An agency relationship exists between Bill, and Trucks o' Plenty, a trucking firm that he founded five years before and of which he is currently the CEO. Bill signs contracts for Trucks o' Plenty with the name of a fictitious company, Truck Time, including one with Andrew, who knows that Bill owns a trucking firm but is unsure of its name. Given that, Bill is a(n) ___________ principal, and he is likely ________ on these contracts.
Multiple Choice
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disclosed; not liable
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disclosed; liable
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fully disclosed; not liable
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undisclosed; not liable
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nonexistent; liable
Expert Solution
Answer is: unidentified; liable.
There are two requirements for a principal to be unidentified: the third party involved must have knowledge there is a principal, but; the third party does not know who the principal is. In the example, Andrew knows Bill owns a company but he is not sure about the name of Bill's company. Then, in Bill-Andrew contracts, Andrew knows Bill may be acting on behalf of his own company (under his name) or a different organization, hence, there is a principal. The latter makes Bill an unidentified principal implying he is liable for the decisions taken on the contracts.
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