Agency is the Legal relationship between an Agent and Principal. In a contract of Agency, a person appoints another person to act on his behalf with a third party. The person who appoints another person is called 'Principal' and the person, who is appointed is called 'Agent'

Agent :

        An “agent” is a person employed to do any act for another or to represent another in dealing with third persons. (See.. Classification of Agent  )

                    The general rule is that the principal can enforce, and can be held liable on a contract entered into by the agent except when there is a contract to the contrary. Section 230 of the contract act clearly lays down this rule; " 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 he personally bound by them".

See also... Classification of Agent 

 An agent is however, personally liable in the following cases:

1.When the contract expressly provides... A person when .... Into a contract with an agent may expressly stipulate that he could hold the agent personally liable in case of breach of Contract the agent agrees to it, he is personally liable.

2.When the agent acts for a foreign principal:

           When the contract is made by an agent for the sale or purchase of goods for a merchant residing abroad , the agent is personally liable .he can exclude his personal liability by express provision to this effect in the contract . if he dose so , he cannot be sued on the contract

3.When the acts for an undisclosed principal:  

           Where an agent acts for an undisclosed principal, he is personally liable though the principal ,on being discovered by the third party is also liable

4.When he acts a principal who cannot be sued:

           Where the principal is incompetent to enter into a contract ,e.g where the principals a minor or an idiot, the agent is personally liable as the credit is presumed to have been given to the agent and not to the principal

5.Where he sing a contract in his own name:

           An agent who signs a contract in his own name without qualification, though know to be an agent is understood to have contracted personally unless a country intention plainly appears from the body of the instruments .

6.Where he acts for a principal not existence:

            This is rather peculiar case. the promoters of a company, yet to be incorporated,sometimes enter into contract s on behalf of the company though in such a case the alleged principal (i.e the company) has no legal existence till the time incorporation. in such case the promoters are held to have contracted on their own account and are personally liable.

7.Where he is liable for breach of warranty: 

          Where a person professed to act as an agent but has no authority from the alleged principal or exceeds his authority he is personally liable for breach of warranty of authority in a suit by the third party with whom he professed to make the contract

8.Where the receives or pay money by mistake or fraud: 

            Where an agent receives money from a third party by mistake or fraud, he is personally liable to third parties .likewise ,he has the right to sue the third party for the recovery of the money where he has paid it by mistake or under fraud of third party.

9.Where his authority is coupled with interest:

             When an agent has an interest in the subject matter of the contract entered into by him with a third party ,his authority is coupled with interest he has in such a case the right to sue ,or be sued ,but only to the extent of that interest in the subject matter.

10. where the trade usage or custom makes him personally liable:

              Where there is a trade usage or a custom making him personally liable ,he is liable there is a contract to the country .

See...... Difference between Agent and Servant 

            Essential Elements of Agency


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