PERSONAL LIABILITY OF AN AGENT

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Q-9:     Describe the personal liability of an agent.

Ans:    PERSONAL LIABILITY OF AN AGENT

GENERAL RULE [SECTION 230]

In the absence of any contract to that effect, an agent cannot personally enforce contract entered into by him on behalf of his principal, nor is personally bound by them.

WHEN TNE AGENT BECOMES PERSONALLY LIABLE

 

(a)        IN CASE OF FOREIGN PRINCIPAL [SECTION 230]

Where an agent for the sale-or purchase of goods makes the contact for a merchant residing aboard, in the absence of any contract to the contrary, it is presumed that the agent is personally liable for such contracts.

(b)        IN CASE OF UNDISCLOSED PRINCIPAL [SECTION 230]

Where an agent for an undisclosed principal makes the contract, in the absence of any contract to the contrary, it is presumed that the agent is personally liable.

(c)        IN CASE OF INCOMPETENT PRINCIPAL [SECTION 230]

Where a contract is made by an agent for a person who cannot be sued (e.g. minor, lunatic, foreign ambassador), in the absence of any contract to the contrary/it is presumed that the agent is personally liable.

(d)        IN CASE OF PRINCIPAL NOT IN EXISTENCE

Where the promoter for a company not yet incorporated makes a contract, the promoters are personally liable.

(e)        IN CASE OF ACTS NOT RA TIFIED [SECTION 23S]

A personal untruly representing himself to be the authorized agent of another, and thereby including a third person to deal with him as such agent, is liable, if his alleged employer does not ratify his acts, to make compensation to the other in respect of nay loss or damage which he has incurred by so dealing.

(f)         IN CASE OF ACTS IN HIS OWN NAME

Where an agent makes a contract without disclosing that he is contracting as an agent, the agent is personally liable,

EXAMPLE

X took a loan from Y by executing a hundi in Ys favour. X did not sign the hundi as agent of the firm nor did he disclose to Y the name of his principal. The agent was held personally liable.

(g)        IN CASE OF CUSTOM OR USAGE OF TRADE

Where there is a customer or usage of trade making the agent personally liable, in the * absence of any contract to the contrary, the agent is personally liable. 

EXAMPLE

X, a share broker purchased 100 shares @ Rs 100/= per share and sold the same shares @ Rs 90/= per share on behalf of Y who refused to give the difference. X is personally liable because it is a custom that a share broker is personally liable for the contract entered into by him.

RIGHT OF PERSON DEALING WITH AGENT

(A)       RIGHT OP PERSON DEAUNG WITH AGENT PERSONALLY LIABLE [SECTION 233]

In case where the agent is personally liable, a person dealing with him may hold either him or his principal or both of them liable.

EXAMPLE

A enter into a contract with B to sell him 100 bales of cotton and after wards discover that B was acting as agent C A may sue either B or C, or both for the price of the cotton.

(b)        CONSEQUENCES OF INCLUDING AGENT OR PRINCIPAL ACT ON BELIEF THAT PRINCIPAL OR AGENT WILL BE HELD EXCLUSIVELY LIABLE [SECTION 234]

When a person who has made a contract with an agent induces the agent to act upon the belief that the principal only will be held liable, or induces the principal to act upon the belief that the agent only will \ e held liable, he cannot afterwards hold liable the agent or principal respectively. Models for http://eduessayhelper.org all elegant essay lessons follow

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