Indian Contract Act Section 234 — Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable

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

Commercial / Corporate

Summary

When a person makes a contract with an agent, and that person leads the agent to believe that only the principal will be held responsible, or leads the principal to believe that only the agent will be held responsible, that person cannot later change their position. Specifically, they cannot afterwards hold the agent liable if they induced the agent to believe the principal alone would be liable, and they cannot hold the principal liable if they induced the principal to believe the agent alone would be liable.

Official Text

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 be held liable, he cannot afterwards hold liable the agent or principal respectively.