Question

Julius, a collector and seller of Egyptian relics, hired Brutus to act as his sales agent. Julius later discovered that Brutus, along with others was embezzling his funds. Julius confronted Brutus and said "You too Brutus? Then you are fired". Anthony, a customer who had dealt with Brutus as Julius' agent before, was not aware that Brutus had been fired. Brutus came to Anthony, and claiming to be acting as Julius' agent sold Anthony an Egyptian relic, accepting full payment of $100,000 in cash and promising to deliver the relic in two weeks. Brutus then disappeared, and now Anthony is demanding that Julius honor the contract because Brutus was his agent. In this situation:
A. Julius is bound on this contract because Brutus had implied authority.
B. Julius is bound on this contract because Brutus had apparent authority.
C. Julius is bound on this contract because Brutus had express authority.
D. Julius is bound on this contract because Brutus had direct authority.

Answer 1

Answer: Julius is bound on this contract because Brutus had apparent authority

Explanation:

Based on the scenario and the information given, Julius is bound on this contract because Brutus had apparent authority.

Apparent authority simply refers to a scenario whereby means a principal in this case Julius is bound by the action of the agent that is, Brutus even though Brutus had no authority. Here, Anthony believed that Brutus had an authority to act not knowing that he had been fired.