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C is corrent because when the agency relationship is terminated by an act of the principal and/or agent, third parties are entitled to notice of the termination from the principal. Failure of the principal to give the required notice gives the agent apparent authority to act on behalf of the principal. Specifically, the principal must give actual notice to all parties who had prior dealings with the agent or principal. Constructive or public notice must be given to parties who knew of the existence of the agency relationship, but did not actually have business dealings with the agent or principal. Since Dixon Sales, Inc. did not give proper constructive notice to Hale Stores, Crow had apparent authority to bind the principal and, therefore, Hale Stores will win.
A is incorrect because Dixon is liable for the torts of its authorized agent under the doctrine of respondeat superior.
B is incorrect because Crow had apparent authority to bind Dixon to the contract.
D is incorrect because a principal is not an absolute insurer of his agent’s acts. A principal is liable for his agent’s torts only if the principal expressly authorizes the conduct or the tort is committed within the scope of the agent’s employment.