Test: CPA Regulation (REG)

1.

Clarett, who owned a retail business, left a note on a desk Clarett thought was occupied by Franklen. The note stated, "Please contract to purchase 20,000 widgets at the best possible price from Eisen Corp. for delivery in March." The desk was actually being used by Saranz, who made a contract for the purchase of the widgets as specified. Saranz had little negotiating experience and contracted for a high price. Which of the following statements is correct regarding the authority held by Saranz?

Saranz had apparent, but not actual, authority to make the contract, so the contract is not enforceable by Eisen.

Saranz had authority by ratification, so the contract is enforceable by Eisen.

Saranz had actual authority to make the contract, so the contract is enforceable by Eisen.

Saranz did not have any authority to make the contract, so the contract is not enforceable by Eisen.

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