ACCA Applied Skills · Corporate and Business Law (Global) · Agency law
Amira appoints Boris as her agent to buy machinery up to a value of 50,000. Boris, acting within his actual authority, signs a contract with Cato Ltd for machinery costing 40,000, clearly stating that he acts on behalf of Amira, who is named. Who is liable to Cato Ltd on the contract?
Amira alone is liable. Boris acted within his actual authority and disclosed that he was acting for a named principal, so the contract is between Amira and Cato Ltd, and Boris drops out of the contract with no personal liability.
- ABoris only, because he signed the contract
- BAmira only, because she is a disclosed principal and Boris acted within authorityCorrect
- CAmira and Boris jointly, because both are party to the contract
Explanation
Where an agent acts within actual authority for a named (disclosed) principal, the contract is between the principal and the third party. The agent drops out and is not personally liable. Option A and C wrongly make the agent a party.
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