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C is corrent. Apparent authority exists when a third party has reason to believe that an agent has the authority to enter into contracts of the nature involved, based upon a principal’s representations. Secret limitations placed on the agent’s normal authority creates apparent authority. In this case, it was reasonable for Shady to believe that Borg had the authority to enter into the contract, given Borg’s position in the company as vice president of purchasing. The fact that Dent secretly limited Borg’s authority has no effect, and Crater Corp. can be held liable for the full terms of the contract.
A is incorrect. Apparent authority exists when a third party has reason to believe that an agent has the authority to enter into contracts of the nature involved, based upon a principal’s representations. Secret limitations placed on the agent’s normal authority creates apparent authority. In this case, it was reasonable for Shady to believe that Borg had the authority to enter into the contract, given Borg’s position in the company as vice president of purchasing. The fact that Dent secretly limited Borg’s authority has no effect, and Crater Corp. can be held liable for the full terms of the contract. 
A is incorrect. Apparent authority exists when a third party has reason to believe that an agent has the authority to enter into contracts of the nature involved, based upon a principal’s representations. Secret limitations placed on the agent’s normal authority creates apparent authority. In this case, it was reasonable for Shady to believe that Borg had the authority to enter into the contract, given Borg’s position in the company as vice president of purchasing. The fact that Dent secretly limited Borg’s authority has no effect, and Crater Corp. can be held liable for the full terms of the contract. 
D is incorrect. Apparent authority exists when a third party has reason to believe that an agent has the authority to enter into contracts of the nature involved, based upon a principal’s representations. Secret limitations placed on the agent’s normal authority creates apparent authority. In this case, it was reasonable for Shady to believe that Borg had the authority to enter into the contract, given Borg’s position in the company as vice president of purchasing. The fact that Dent secretly limited Borg’s authority has no effect, and Crater Corp. can be held liable for the full terms of the contract.