Indian Contract Act Section 232 — Performance of contract with agent supposed to be principal
CHAPTER X AGENCY — Effect of agency on contracts with third persons
Commercial / Corporate
Summary
Where one person enters into a contract with another, and neither party knows or has reasonable reason to suspect that the other is acting as an agent, the principal—if he later demands that the contract be performed—can only enforce that performance while respecting the rights and obligations that already exist between the agent and the other party to the contract. In other words, the principal steps into the contract as it stands, not as he might wish it to be, and cannot override what the agent and the other party have already agreed to between themselves.
Official Text
Where one man makes a contract with another, neither knowing nor having reasonable ground to suspect that the other is an agent, the principal, if he requires the performance of the contract, can only obtain such performance subject to the rights and obligations subsisting between the agent and the other party to the contract. Illustration