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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. The facts are close, and both sides can cite a rule that appears favorable. The parties disagree about the legal effect of those facts. Which option gives the best analysis?

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Reject the claim or defense solely because the opposing party disputes a required fact. Stop the analysis once the proponent states a plausible rule, without addressing the strongest counterargument. 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. Treat the formal label attached to the claim or defense as conclusive and disregard facts bearing on the rule's elements.

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