Principal disclosure contract liability · Select two

Apply the rule

Grayson Holt, an equipment broker, approached Wren Cabinetry, Inc. in March 2026 to purchase a surplus CNC router. Grayson told Wren's president that he was "acting for a client who does not want to be named yet" and that he held written authority from the client to pay up to $60,000. The client was Pelican Woodworks LLC, and its written authorization matched what Grayson described. Grayson signed the sales agreement "Grayson Holt, as agent for a buyer to be identified," at a price of $55,000. Wren asked no further questions. Pelican later refused to complete the purchase after its lender withdrew financing. Wren sues both Grayson and Pelican for the price.

Which two of the following statements correctly describe liability on the agreement?

Choose exactly two answers.

A. Grayson is not liable because he signed expressly as an agent and Wren knew he was acting for someone else.B. Grayson is liable as a party to the contract because his principal was unidentified when the agreement was signed and he did not obtain Wren's agreement to look only to the principal.C. Pelican is liable as a party because Grayson had actual authority to make a purchase within the $60,000 limit.D. Pelican is not liable because a principal that is not named in the contract cannot be bound by it.E. Wren can recover from Pelican only by proving that Grayson had apparent authority.F. Grayson's only exposure is for breach of the implied warranty of authority.

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Question ID: business-associations-mcq-c1-05 · Report an issue with this ID · Coverage and review status