Indian Contract Act Section 230 — Agent cannot personally enforce, nor be bound by, contracts on behalf of principal

CHAPTER X AGENCY — Effect of agency on contracts with third persons

Commercial / Corporate

Summary

Unless there is a specific agreement saying otherwise, an agent cannot personally enforce a contract they made on behalf of their principal, and they are also not personally bound by that contract. This means the agent is generally not a party to the contract for their own benefit or liability.

However, the law presumes that the agent is personally responsible in three specific situations.

Under sub-section (1), this presumption applies when the agent makes a contract for the sale or purchase of goods for a merchant who lives abroad.

Under sub-section (2), this presumption applies when the agent does not disclose the name of their principal.

Under sub-section (3), this presumption applies when the principal is disclosed but cannot be sued.

Official Text

In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Presumption of contract to contrary—Such a contract shall be presumed to exist in the following cases:—

(1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad;

(2) where the agent does not disclose the name of his principal;

(3) where the principal, though disclosed, cannot be sued.