Apparent authority (also called ostensible authority) arises when the principal's words or conduct reasonably lead a third party to believe the agent has authority, and the third party reasonably relies on that belief. The principal is bound even if the agent lacked actual authority. The key elements are the principal's representations (not the agent's beliefs) and the third party's reasonable reliance. Answer B incorrectly focuses on the agent's belief rather than the principal's conduct. Answer C is incorrect because ratification is a separate doctrine; apparent authority does not require prior ratification. Answer D is incorrect because apparent authority exists independently of actual authority.

Stellar created apparent authority by holding Mia out as 'Regional Sales Director' - a title that a reasonable customer would associate with authority to negotiate typical sales terms including discounts. The secret internal restriction on discounts does not limit Mia's apparent authority because the customer had no notice of it. The principal is bound when a third party reasonably relies on apparent authority created by the principal's representations. Answer B is correct. Answer A focuses only on the exceeded actual authority and ignores apparent authority; actual authority and apparent authority are independent bases for binding the principal, and exceeding actual authority does not defeat apparent authority. Answer C is incorrect because a third party is not required to independently verify every agent's authority when the principal has held the agent out with a title. Answer D is incorrect because the agent's good faith is not the determinative factor for apparent authority.

Ratification occurs when a principal approves or affirms an unauthorized act that was purportedly done on their behalf. Upon ratification, the contract is treated as if it had been authorized from the outset, and the principal is fully bound. Ratification generally requires that the principal know all material facts at the time of ratification and that the principal ratify the entire transaction. Answer B describes the principal giving instructions to the agent, not ratification of past acts. Answer C describes an agency agreement. Answer D is incorrect because ratification is an act by the principal, not the third party.

Implied actual authority is actual authority that is not expressly stated but is reasonably inferred from the nature of the agent's position, the express authority granted, or the circumstances of the agency. It includes authority to do things that are customary, necessary, or incidental to carrying out the express authority. Answer A describes apparent authority, which is based on third-party perception. Answer C describes emergency authority or authority by necessity, a more specific concept. Answer D describes ratification, not implied authority.

Respondeat superior (Latin for 'let the master answer') imposes vicarious liability on employers for the tortious acts of employees committed within the scope of employment. The employer need not have been negligent or have authorized the specific act; liability is strict and based on the employment relationship and scope. Answer A describes negligent hiring or supervision, which is a separate theory of direct employer liability. Answer C is incorrect because respondeat superior does not require express authorization; it applies to acts within the general scope of employment. Answer D is incorrect because an employee need not be acting for the employer's financial benefit; any activity within the scope of the employment relationship suffices.

The most important factor in distinguishing an employee from an independent contractor is the degree of control the principal exercises over the manner and means of performing the work. An employee is subject to the principal's direction and control in how they do their work; an independent contractor is only controlled as to the result. Answer A (payment method) is a factor but not the most determinative. Answer B (tools and equipment) is a relevant factor but secondary to control. Answer D is incorrect because the label in a contract does not conclusively determine the legal status; courts look at the actual relationship.

When actual authority is terminated, apparent authority may survive until proper notice of termination is given. Third parties who previously dealt with the agent are entitled to actual notice of termination (direct notification). Third parties who knew of the agency but never personally dealt with the agent are entitled to constructive notice (such as publication). Until proper notice is given, the principal may be bound by the former agent's acts under apparent authority theory. Answer B is correct. Answer A addresses only the termination of actual authority and ignores the apparent authority that survives until the principal provides proper notice to parties who previously dealt with the agent. Answer C is incorrect because apparent authority does not automatically terminate with actual authority; it persists until notice is communicated. Answer D incorrectly conditions the outcome on the customer proving damages; the binding effect of apparent authority does not require a showing of harm.

When an agent signs a contract in their own name without disclosing that they are acting as an agent, or without disclosing the principal's identity, the agent is personally liable on the contract. The buyer believed they were contracting with the agent personally. In a partially disclosed principal situation (agent discloses they are an agent but not the principal's identity), both the agent and the principal can be held liable. Answer A is incorrect because signing in one's own name creates personal liability. Answer B is incorrect because the liability is contractual, not for negligent misrepresentation. Answer C incorrectly applies respondeat superior, which is a tort doctrine.

Emergency authority (or authority by necessity) allows an agent to take reasonable actions beyond granted authority when an unforeseen emergency arises that threatens the principal's interests and the agent cannot timely consult with the principal. The emergency must be genuine and the agent's response must be reasonable under the circumstances. Answer A is incorrect because the agent's personal judgment that something would benefit the principal does not create emergency authority. Answer B is incorrect because mere inability to reach the principal by phone is not sufficient; there must be a genuine emergency threatening harm. Answer C is incorrect because disagreement with instructions does not create emergency authority.

When an agent acts for a fully disclosed principal within actual authority, the contract is between the principal and the third party. The agent is not a party to the contract and bears no personal liability for the principal's subsequent breach. The agent's role was merely as a conduit to form the contract. Answer B is incorrect because the agent's full disclosure of the principal removes the agent from personal liability. Answer C is incorrect because signing on behalf of a disclosed principal (in the principal's name or as agent) does not create personal liability. Answer D is incorrect because the agent's knowledge of the breach does not create personal liability.