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After a business relationship breaks down, owners, managers, and outsiders dispute who is bound and who must pay. A manager signed a supply agreement after receiving mixed instructions from the owner. One argument was preserved, while another was raised only later. The parties disagree about the legal effect of those facts. Which option gives the best analysis?

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The court should resolve the dispute by applying the operative rule to the material facts: The answer should identify the governing rule for Actual and Apparent Authority and apply it to the operative facts. Resolve the dispute on equitable fairness alone without identifying the governing doctrine or its limits. Treat the formal label attached to the claim or defense as conclusive and disregard facts bearing on the rule's elements. Import a rule from a nearby issue instead of applying the rule triggered by these facts.

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