Smith, a real estate agent, is retained by Mega Corp. to buy for it property owned by Doe. Mega tells Smith he may buy the property for up to $800,000. Smith tells Doe he is representing Mega and makes an offer for the property, for $825,000, which Doe accepts. Smith and Doe write a contract of sale and sign it. Mega Corp. refuses to honor this contract. When Doe sues for breach of contract, who is liable for Does losses?

1. Smith only
2. Mega Corp. only
3. Both Smith and Mega Corp.