Law question

Michael has been appointed managing director of Worldwide Trading Pty Ltd. He is authorised to undertake purchases up to a maximum value of $10,000 without reference to the board of directors. Michael orders office equipment valued at $15,000 from Jack. Which of the following statements is correct?

Select one:

a.

Worldwide Trading is not bound by the contract because Michael has no actual authority to enter into this transaction.

b.

Worldwide Trading is bound by the contract because, by appointing him managing director, the board has represented to innocent third parties that Michael has authority to exercise all the management powers ordinarily vested in the holder of that office.

c.

Worldwide Trading is bound by the contract because a company is always bound by the acts of any of its officers.

d.

Worldwide Trading is not bound by the contract because a managing director can never bind a company.