im kind of confused about the concept on agency
Tania had apparent authority to buy a car for Sharon, provided the price was less than $10,000. Tania has now entered into an agreement to buy a car, on Sharon's behalf, from Douglas for $15,000.
the answer on the quiz was
Sharon can purchase the car if she chooses to
why isnt the answer Sharon must purchase the car.??
i mean, tania had apparent authority to buy a car and even if tania didn't follow instructions and still bought the car wouldnt sharon still be bound by the deal, so wouldn't she had to purchase the car???
Already answered.
http://www.jiskha.com/display.cgi?id=1228913688
In this scenario, the concept of agency and apparent authority comes into play. Apparent authority refers to a situation where a third party reasonably believes that someone has the authority to act on behalf of another person (the principal) based on the principal's conduct or communication.
In the case you provided, Tania had apparent authority to buy a car for Sharon, as long as the price was less than $10,000. However, Tania went against the instructions and entered into an agreement with Douglas to buy a car for $15,000.
The key point here is that apparent authority is limited to the extent of the actual authority granted. In this case, Tania's actual authority was restricted to purchases under $10,000. Therefore, Tania exceeded her actual authority by agreeing to buy the car for $15,000.
As a result, Sharon, the principal, is not bound by the agreement because Tania did not have the necessary authority to enter into the agreement for a price exceeding $10,000. Even though Tania went against the instructions, Sharon is not obligated to purchase the car since Tania's actions were beyond her actual authority.
The correct answer, "Sharon can purchase the car if she chooses to," acknowledges that Sharon has the option to go ahead with the purchase if she desires, but it is not an obligation.