Question

On behalf of a general partnership that operates an appliance store, a partner, Locke, contracts to buy 15 stoves from Gage. Unknown to Gage, Locke was not authorized by the partnership agreement to make such contracts. Another partner, Vorst, refuses to allow the partnership to accept delivery of the stoves and Gage seeks to enforce the contract.a. lose, because locke's action was not authorized by the partnership agreement.b. lose, because locke was not an agent of the paetnership.c. win, because locke had express authority to bind the partnership.d. win, because locke had apparent authority to bind the partnership.

Answer 1

Answer:

D) win, because locke had apparent authority to bind the partnership.

Explanation:

Apparent authority refers to an an agent (in this case Locke) that has the power to act on behalf of a principal (the partnership), even though that power has not been expressly granted. The principal's conduct must imply that it has granted that power to the agent in order for a third party to reasonably believe it.

In this case Locke is a partner, so he is part owner of the partnership, that is why Gage reasonably believed that he had the power to place the order. Usually if the agent (Locke) had apparent authority, the principal (the partnership) will be liable for his actions.