Authority In Real Estate

Summary

Apparent authority arises when a third party reasonably believes an agent has authority due to the principals representations. Jakes appearance and claim create an impression of authority, but his actual authority is unclear. In the case of stan, he is personally liable because mrg was an undisclosed principal, meaning the seller was unaware he acted for mrg. This makes stan liable on the contract.

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McQueen Restaurant Group (MRG) owns the “Hoppin” restaurant with two locations (downtown and west side). It has * employees, including a business manager, store managers, cashiers, cooks, and servers. MRG’s owners asked MRG’s business manager, Stan Theman, to buy a building that MRG can open as a third “Hoppin” location. The building was owned by one of MRG’s competitors, so MRG’s owners instructed Stan to negotiate and sign the contract to buy the building without telling the seller that he was buying the building for MRG. Stan did so. Can the seller of the building hold Stan liable on the contract to buy the building? Group of answer choices Two of the answer choices are correct. Yes, because MRG was an undisclosed principal. Yes, because Stan had apparent authority. No, because MRG was an undisclosed principal.
Based on the scenario provided, the seller of the building can hold Stan liable on the contract to buy the building because MRG was an undisclosed principal. An undisclosed principal means that the third party (seller) was unaware that Stan was acting on behalf of someone else (MRG). This makes Stan personally liable on the contract. The correct answer would be:
- Yes, because MRG was an undisclosed principal.