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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 parties disagree about the legal effect of those facts. Which analysis is most consistent with these facts?

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The court should resolve the dispute by applying the operative rule to the material facts: Agency authority turns on actual authority, apparent authority traceable to the principal, ratification, and the reasonableness of the third party's reliance. Import a rule from a nearby issue instead of applying the rule triggered by these facts. 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.

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