Question
Borg is the vice-president of purchasing for Crater Corp. He has authority to enter into purchase contracts on behalf of Crater Corp., provided that the
Borg is the vice-president of purchasing for Crater Corp. He has authority to enter into purchase contracts on behalf of Crater Corp., provided that the contract price does not exceed $2 million. Dent, the president of Crater Corp., is required to approve any contract that exceeds $2 million. Borg entered into a $2.5 million purchase contract with a business, Shady Corp., without Dent's approval. Shady Corp. reasonably believed that Borg had the proper authority to enter into the contract and was unaware that Borg exceeded his authority. Neither party substantially changed its position in reliance on the contract. What is the most likely result of this transaction?
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