Lyle is Thelma\'s agent. Thelma has made it clear to Lyle that she does not want
ID: 338648 • Letter: L
Question
Lyle is Thelma's agent. Thelma has made it clear to Lyle that she does not want him to sign the contracts that he negotiates; she retains that power. If, despite Thelma's instructions, Lyle negotiates and signs a contract with Tom committing Thelma to spend thousands of dollars, what will the consequences of Lyle's actions be?
a. if Tom was justified in presuming Lyle had authority to sign the contract, Thelma will be responsible
b. neither Lyle nor Thelma will be responsible for paying because Lyle exceeded his duty of accounting to Thelma
c. Tom can be justified in presuming Lyle had authority to sign the contract only if Tom asked Thelma
d. Lyle must pay Tom out of his own pocket
e. Tom may sue Lyle but not Thelma to enforce the contract
Explanation / Answer
Lyle is Thelma's agent. Thelma has made it clear to Lyle that she does not want him to sign the contracts that he negotiates; she retains that power. If, despite Thelma's instructions, Lyle negotiates and signs a contract with Tom committing Thelma to spend thousands of dollars, what will the consequences of Lyle's actions be?
a. if Tom was justified in presuming Lyle had authority to sign the contract, Thelma will be responsible
b. neither Lyle nor Thelma will be responsible for paying because Lyle exceeded his duty of accounting to Thelma
c. Tom can be justified in presuming Lyle had authority to sign the contract only if Tom asked Thelma
d. Lyle must pay Tom out of his own pocket
e. Tom may sue Lyle but not Thelma to enforce the contract
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