230. Agent cannot personally enforce, nor be bound by, contracts on behalf of principal.---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.

Such a contract shall be presumed to exist in the following cases:---

Presumption of contract to contrary. (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.

Principle of the rule and exceptions.---The test question in cases within the principle of this section is always to whom credit was given by the other party, or, if that cannot be proved as a fact, to whom it may reasonably be presumed to have been given. Thus, in the cases here specially mentioned, the party cannot be supposed to rely exclusively on a foreign principal whom, by general mercantile usage, the agent's contract is not understood to bind, or on a person whose name he does not know, and whose standing and credit he therefore cannot verify, or on a person or body who, for whatever reason, is on the face of the transaction not legally liable. For the general rule it is needless to multiply authorities. "Ordinarily an agent contracting in the name of his principal and not in his own name is not entitled to sue nor can he be sued, on such contracts." "When in making a contract no credit is given to himself as agent, but credit is exclusively given to his principal, he is not personally liable thereon": The rule applies although the agent knows that the contract is one that he has no authority to make on behalf of the principal, and makes it fraudulently. Even in that case he cannot be sued on the contract if it is professedly made by him merely in his capacity as agent.

Contract to the contrary.---Whether an agent apart from the cases specially mentioned, is to be taken to have contracted personally, or merely on behalf of the principal, depends on what appears to have been the intention of the parties, to be deduced from the nature and terms of the particular contract and the surrounding circumstances. In the case of oral contracts the question is purely one of fact. If the contract is in writing, the presumed intention is that which appears from the terms of the written agreement as a whole.

An agent who signs a contract in his own name without qualification, though known to be an agent, is understood to contract personally, unless a contrary intention plainly appears from the body of the instrument, and the mere description of him as an agent, whether as part of the signature or in the body of the contract, is not sufficient indication of a contrary intention to discharge him from the liability incurred by reason of the unqualified signature. On the other hand, if words are added to the signature indicating that he signs "as an agent," or on account or behalf of the principal, he is considered not to contract personally, unless it plainly appears from the body of the contract, notwithstanding the qualified signature, that he intended to make himself a party.

Oral evidence of intention is not admissible for the purpose of discharging an agent from liability on a written contract, from the terms of which he appears to have intended to contract personally, although it has been held in England that he is entitled, by way of equitable defence, to prove an express oral agreement that, having regard to his being merely an agent, he should not be sued on such a contract. But where the terms of the written contract are such as not to import a personally liability on the part of the agent, oral evidence may be given to show that by the custom of the particular trade an agent so contracting is personally liable, either absolutely or conditionally, provided the custom is not inconsistent with the express written terms.

Thus where a firm of brokers entered into a contract "for principals" for the sale of gunny and hessian, oral evidence was allowed to show that by custom of the trade in gunny and hessian in Calcutta brokers were personally liable both to buyers and sellers.

Agency coupled with interest.---It is also settled law that when an agent has made a contract in the subject-matter of which he has a special property he may, even though he contracted for an avowed principal, sue in his own name. Such is the case of a factor and of an auctioneer who has a possession coupled with an interest in goods which he is employed to sell, not a bare custody, like a servant or a shopman, and a special property by reason of his lien. Conversely the auctioneer may be liable to the buyer for neglect to deliver the goods or to an outstanding true owner for conversion, and if the sale has been advertised as being without reserve, the auctioneer is decreed impliedly to contract to accept the offer of the highest bona fide bidder and is liable to him in damage if he accepts a bid from the vendor.

Where an agent enters into a contract as such, if he has interest in the contract, he may sue in his own name. This is not a real exception to the rule laid down at the beginning of the section, the agent being in such a case virtually a principal to the extent of his interest in the contract.

Whenever an agent has entered into contract in such terms as to be personally liable, he has a corresponding right to sue thereon, and this right is not affected by his principal's renunciation of the contract. Policy brokers also are entitled by custom to sue in their own names on all policies effected by them. But the mere fact that an agent is acting under a del credere commission does not give him the right personally to enforce a contract which he is not otherwise entitled to enforce.

Right of agent to sue for money paid by mistake, etc.---An agent may in his own name sue for the recovery of money paid on his principal's behalf under a mistake of fact, or in respect of a consideration which fails, or in consequence of the fraud or other wrongful act of the payee, or otherwise under circumstances rendering the payee liable to repay the money.

Principal undisclosed.---The rule under this head is so well settled that it will , suffice to refer to cases without going back here to the ultimate authorities. The qualification expressed in the following sections to S. 234 inclusive are now the part of the doctrine requiring most attention. The decisions establishing them contain ample proof of the rule. The same principles are followed in Indian Courts. The honorary secretary, therefore, of a school alleged to have been maintained by an association in London is personally liable for the rent of a house hired by him in his name for the purposes of the school. But if the other party knows that the agent is contracting as such, the presumption laid down in this clause does not arise, although at the time of making the contract the agent does not disclose the name of the principal, the knowledge being in such a case equivalent to disclosure. Thus the secretary of a club cannot be sued personally for work done for the club, unless he has pledged his personal credit. And similarly he cannot sue a member on behalf of the club for goods supplied to him. But the presumption that an agent is personally bound by a contract when the name of the principal is not disclosed may be rebutted, and where the contract is in writing, the whole of the contract is for the purpose to be examined. The mere fact, however, that the agent has signed himself as such will not rebut the presumption of personal liability. But if the agent appears, on the face of the written contract, to be liable personally, he will not be allowed to adduce oral evidence to show that he did not contract in his personal capacity. If a person who has contracted as agent, when sued personally pleads that his principal was W, and fails to establish this plea, he will be personally liable, as the burden of proving the identity of his principal falls upon him.

Where the usual presumption is negatived by an agent contracting for an unnamed principal in such terms as to exclude his own liability, he may nevertheless show afterwards, if the fact be so, that he is himself the principal, or the other party on discovering that fact may sue him.

Where an ancestral business is carried on by some only of the members of a joint Hindu family as managers, a contract made by the managers in their own name may be enforced by them personally without joining the other members as parties to the suit. The managing members are in such a case in the position of agents for undisclosed principals.

A merchant in this country who orders goods through a firm of commission agents in Europe cannot hold the firm liable for failure to deliver the goods. The firm is in such a case merely an agent to place the merchant's order with the manufacturers in Europe, and by so doing it does not enter into any contract with the merchant for sale on behalf of the manufacturers, and it cannot therefore be held liable as an agent acting on behalf of undisclosed principals. The section refers to contracts "entered into by him on behalf of his principal," and the placing of the order does not amount to such a contract. The result is the same if the goods are ordered through a branch in his country of a firm of commission agents in another country.

A broker is an agent primarily to establish privity of contract between two parties. A broker when he closes a negotiation as the common agent of both parties usually enters it in his business book and gives to each party a note of the transaction which as given to the seller is the sold note and as given to the buyer the bought note. Prima facie a broker is employed to find a buyer or seller and as such is a mere intermediary. He is thus an agent to find a contracting party, and as long as he adheres strictly to the position of broker, his contract is one of employment between him and the person who employs him and not a contract of purchase or sale with the party whom he in the course of such employment finds. A broker may, however, make himself a party to the contract of sale or purchase, for he can go beyond his position of a negotiator or agent to negotiate and by the terms of the contract make himself the agent of his principal to buy or sell. Where he is merely an intermediary, he is not liable on the contract; but if he has entered into a contract of purchase or sale on behalf of his principal, the provisions of this section will apply. Thus if the principal is undisclosed, and the note says "sold for you to my principals," i.e., I, your broker, have made a contract for my principals, the buyers, the broker is merely an intermediary, and he is not personally liable to his employer. For the same reason he is not liable if the contract says bought for you from my principals, and the terms sold by order and for account of G to selves for principal," the broker signing as broker, do not bind him personally, nor therefore entitle him to sue in his own name for failure to deliver. But the broker is personally liable if the contract says "bought of you for my principals," for here the contract is one of purchase by the broker on behalf of undisclosed principals.

Principal not liable.---There is a rather curious class of cases in which agreements have been entered into by promoters on behalf of companies intended to be, but in fact not yet, incorporated. In such a case the alleged principal has no legal existence, and the agent is held to have contracted on his own account in order that there may not be a total failure of remedy. Other cases have occurred where the principals were uncertain bodies of persons, or otherwise incapable of being sued by the description in the contract; but these would hardly be instructive in the different circumstances of our society.

Sovereign States as principals.---Sovereign States and there rulers Would seem to come within the description of possible principals who cannot be sued; but there is a special rule for this case, and it is settled for sufficient reasons of good sense and policy, that an agent contracting even in his own name on behalf of a Government is not to be considered as personally a party to the contract. No man would accept public office at such risk as a different rule would involve.

Nogotiable instruments.---Where a negotiable instrument is signed by a duly authorised agent in the name of his principal, the latter may be rendered liable on the instrument. But where the instrument is signed by the agent in his own name without indicating thereon that he signs as agent, or that he does not intend thereby to incure personal responsibility, he is liable personally except to those who induced him to sign upon the belief that the principal only would be held liable. The question may arise whether a principal whose name does not appear on a negotiable instrument can be made liable on the instrument as a party thereto.

There is no specific provision in the Negotiable Instrument Act, and it is a question whether, having regard to Ss. 233 and 234, below, the principal cannot be proceeded against upon a negotiable instrument executed by an agent in his own name.

Defendant’s right where agent sues in own name.---Where an agent sues in his own name on a contract made on the principal's behalf, statements made by the principal, as well as his own statements, may be used in evidence against him as admissions, and the defendant is entitled to avail himself of any defence, including that of set-off, which would have been available against the agent if he had been suing on a contract made on his own behalf, even though the defence would not have been available in an action by the principal on the contract. The defendant is also entitled to discovery to the same extent as if the principal were a party to the proceedings.

Effect of settlement with principal.---As a general rule, the right of an agent to sue personally on a contract made on the principal's behalf ceases on the intervention of the principal, and a settlement between the principal and the third party constitutes a good defence to an action by agent. But if the agent has a lien on the subject-matter of the contract as against the principal, his right to sue has priority to the right of the principal as long as the claim secured by the lien remains unsatisfied; and in such a case the defendant cannot in an action by the agent set tip any settlement with or set-off against the principal which would operate to the prejudice of the claim secured by the lien, unless the agent is estopped by his conduct, or by the terms of the contract, from disputing the validity of the settlement or right of set-off.

Exceptions to rule that agent cannot sue in his own name---An agent having an interest in property does not fall within any of exceptions contemplated by S. 230.

Buyer and his agent resident abroad---Section no applicable.---Sub-clause (1) of S. 230 does not apply to a case where the buyer and his agent are both residents abroad.

Liability for supply of duty free shop stores and necessities in compliance with order placed by Master of ship and local agent of foreign owner of ship---Not governed by S. 230---Such case has to be determined with reference to Ss. 1:26, 127.

Contract by agent---When presumption raised by S. 230 is rebutted.---The contract was between the plaintiff company and the foreign company through their Agent in Chittagong. Further, the Arbitration clause in the contract clearly asserts that the Agent will have no personal liability in the matter. Hence the presumption raised by section 230 (a) is rebutted here.

Liability of agent---If may be implied.---The legislature has recognised that a presumption does arise from certain circumstances; the fact that section 230 directs the Court in these cases to draw a rebutable presumption of an implied contract does not displace the ordinary rule that a Court may in appropriate cases hold that a term of a contract is implied.

The course of business may in a particular case lead to the inference that the agent has made himself personally liable.

Applicability---Does not apply to action in tort.---Sections 230 and 233 of Contract Act which deal with breaches of contract do not apply to an action which is solely in tort and turns upon liability in negligence.

Broker---Performing contract under Colombo market usage---If can recover damages for refusing to accept delivery. Under the usage in Colombo Market relating to rubber coupon contracts the broker's note never discloses the name of the other party to the contract, each party is entitled to look to the broker for performance of the contract, and so far as the buyer is concerned the broker is liable to tender and deliver the coupon irrespective of whether the seller has tendered or not. Where in a suit a broker claimed in reconvention to recover damages against the buyer for breach of a contract of purchase of coupons and the District Judge dismissed the claim on the ground that as the broker entered into the contract with the buyer as an agent he could not sue upon it.

Held: That under the agreed usage or the market the broker was liable to deliver to the buyer the coupons sold whether or not he had received them from the seller, and the buyer was liable to pay. In the event of the buyer accepting delivery and refusing payment it is plain that the broker must have a right to enforce the liability. It followed logically from this position that if the buyer wrongfully refused to accept delivery the broker is the person to recover damages for the breach of the contract. The contract imposed upon the broker obligations far more onerous than would normally rest upon an agent. The broker in making payment to the seller and delivery to the buyer was required to act as a principal and these obligations conferred corresponding rights. There was no obligation in law to parties entering into a contract of this nature and the broker was not to be deprived of his rights because they would not have arisen under a normal contract of agency.

Contract by agent on behalf of principal---Liability of agent in case of breach. Under section 230, the agent, except in the three cases specified therein, is not personally bound by the contract. On breach of such contract, therefore, both the principal and agent cannot be sued in the same suit. Where the agent is sought to be held liable, it is to be determined to whom credit was given by the other party, or if that cannot be proved as a fact, to whom it may reasonably be presumed to have been given.

Section 230 protects the agent against personal liability unless he has personally bound himself by the contract. Therefore, the question of determining the personal liability of an agent arises only if there is no contract by an agent for a personal liability. The contract either exists in which case it has to be proved or it does not exist. In certain circumstances, as mentioned in section 230, its existence is presumed. The legal presumption thus raised has to be rebutted by the party contending against it.

The provisions of clause (2) of section 230 under which an agent becomes liable under a contract on the ground that he has not disclosed the name to his principal are attracted to a case when a particular contract is entered into by the agent.

Contract by principal in the absence of agent---Exceptions to section not applicable. When the contract is by the principal himself and the agent has nothing to do with it, and it was entered into in his absence, the exceptions mentioned in section 230 whereby an agent is deemed to be a contracting party himself are not attracted.

231. Rights of parties to a contract made by agent not disclosed.---If an agent makes a contract with a person who neither knows, nor has reason to suspect, that he is an agent, his principal may require the performance of the contract; but the other contracting party has, as against the principal, the same rights as he would have had as against the agent if the agent had been principal.

If the principal discloses himself before the contract is completed, the other contracting, party may refuse to fulfill the contract, if he can show that, if he had known who was the principal in the contract, or if he had known that the agent was not a principal, he would not have entered into the contract.

"Discloses himself."---The High Court of Bombay is of opinion that the right of the third party to repudiate the contract under the second paragraph arises only where the principal himself makes the disclosure, and that it does not arise where the disclosure is made by some other person or the information reaches him from some other source. The principal of this section is further developed in the special rules as to undisclosed or dormant partners; in such cases the real difficulty is often to know whether the acting partner was in fact acting on behalf of the firm. See Pollock and Mulla's Commentaries on S. 19 of the Partnership Act, 1932.

The High Court of Calcutta has held that there is nothing in this section to debar a principal from proceeding against his agent under S. 211, if the facts of the case entitle him to do so.

Principal can sue on goods consigned by his agent---S. 72 Railway Act---No bar to transaction. Section 72 Railways Act has no relevance in determining the question of locus standi. According to this section the liability of the Railways is that of bailes. The section only defines the nature of the liability. It does not say who is the person who is to enforce the liability. The section was not intended in any way to override the provision of section 231 of the Contract Act which enables the principals to sue though the contract has been entered into by the agent.

232. Performance of contract with agent supposed to be principal.---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.

A, who owes 500 rupees to B, sells 1,000 rupees, worth of rice to B. A is acting as agent for C in the transaction, but B has no knowledge nor reasonable ground of suspicion that such is the case. C cannot compel B to take the rice without allowing him to set off A's debt.

Right of undisclosed principal.---Like previous learned commentators on these two sections, we are at a loss to discover any difference between them, except that S. 231 expresses the same matter mot fully. It is submitted, however, that the ground is completely covered by the saving clause in the first paragraph of S. 231, and no further qualification is added by S. 232. The illustration to S. 232 would have been quite as appropriate to S. 231.

Qualification that the principal has not paid the agent, or that the state of accounts between the principal and agent has not been altered to the prejudice of the principal. But this contention did not prevail, and it was said that the only qualification imposed upon the rights of the other contracting party was that specified !n S. 234.

If the principal represents the agent as principal he is bound by that representation. So if he stands by and allows a third person innocently to treat with the agent as principal he cannot afterwards turn round and sue him in his own name.

Equities between agent and third party.--An undisclosed principal coming in to sue on the contract made by the agent must take the contract, as the phrase goes, subject to all equities; that is, the third party may use against the principal any defence that would have availed him against the agent. Where a contract is made by an agent for an undisclosed principal, the principal may enforce performance of it, subject to this qualification, that the person who deals with the agent shall be put in the same position as if he had been dealing with the real principal, and consequently he is to have the same right of set-off which he would have had against the agent.

The words of both Ss. 231 and 232, however, are quite clear on this point. But there must be actual belief that one is dealing with a principal. Ignorance or doubt whether the apparent principal is a principal or an agent is not enough; for the ground of the rule is that the agent has been allowed by his undisclosed principal to hold out himself as the principal, and the third party has dealt with him as such.

The second paragraph of S. 231 is really a branch of the general rule that agreements involving personal considerations of skill, confidence, or the like are not assignable or transferable.

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

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

In cases where the agent is personally liable.---As to the Cases where an agent is personally liable, see S. 230 and commentary thereon, above.

The question arises whether or not this section represents a departure from the recognized and accepted principle that the liability of principal and agent is alternative and not joint. Coutts-Trotter C.J. in Kuttikrishnam Nair v. Appa Nair held that, the wording of the section was very unfortunate. "I have come to the conclusion that what the section means is that the person dealing with the principal through the agent may at his election sue either or he may sue both of them alternatively in a case where he is not sure whom his exact remedy is against; but I am quite clear on this point that the section can only be construed as meaning that he may sue both principal and agent in the alternative and that he cannot get judgment against both of them jointly for the amount sued for. That would be to turn a liability which is clearly mutually exclusive into a joint liability." This is contrary to the view expressed in an earlier Bombay case, where it was said that the section created a joint liability, and if the illustration only showed that the agent and the principal might be joined in one suit, an illustration could not control the plain meaning of the section itself. A Division Bench in Madras have dissented from Coutts-Trotter C.J. in the case cited above, Leach C.J., observing: "There is no ambiguity in the language used in the section and I am unable to see anything unreasonable in the rule, which it embodies. What would be the position if a suit is brought against the principal after judgment had been obtained against the agent in an earlier suit is another matter, but we are not called upon to consider that question here."

The criticism of the learned judges on the language of the section and of the illustration is certainly justified; and it may well be that the framers of the Act did intend to reproduce existing English law. But it is difficult to give the wording of the section a meaning other than that which commended itself to Leach CJ. and his brother judge in Madras. The section itself, whatever may be the case with the illustration, is concerned with substantive law only; Coutts-Trotter CJ., seems to treat it as setting out the creditor's procedural rights. On this construction the creditor may hold either principal or agent as severally liable in the alternative, or at his option hold them jointly liable. If he elects to hold them jointly liable, he can sue them both; but if he elects to sue one only he must be deemed to have given up his rights against the other, since in that case the liability is alternative and not joint.

Creditor's election.---A person who has made a contract with an agent may, if and when he pleases, look directly to the principal, unless by the terms of the contrac the has agreed not to do so, and that whether he was or was not aware when he made the contract that the person with whom he was dealing was an agent only, and not the less so in cases where the agent is personally liable, for the law which superadds the liability of the agent does not detract from the liability of the principal. A company is, therefore, liable for moneys advanced in the course of voluntary liquidation to the liquidator authorised by the company to borrow for the purposes of the winding up. And, upon the same principle, a loan made to the secretary, treasurer, and agent of a company authorised to raise moneys for the company may be recovered from the company. But when once the creditor has elected to sue the agent, and sued him to judgment, he cannot afterwards bring a second action against the principal, though the judgment against the agent may not have been satisfied, and though the creditor was not aware of the existence of a principal when he sued. the agent.

There may, however, be a deliberate intention shown from the beginning of the transaction, or at some later stage, to give credit to the agent alone; in that case there is no right of action against the principal; and the third party must elect to sue an undisclosed principal, if he means of preserve his rights against him, within a reasonable time after ascertaining him. The question whether the creditor has elected to give credit to him to the exclusion of the principal is one of fact. Invoicing the goods to the agent and calling upon him to pay for them, or taking and renewing his acceptances in payment of the price are not conclusive of such an election. The next section is apparently intended to cover all forms of election, whether by estoppel or otherwise.

234. Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable.---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.

This section was applied where the purchaser of goods gave notice to the vendor's agent that he, the agent, would be held responsible if the goods were not as represented by him.

235. Liability of pretended agent.---A person untruly representing himself to be the authorised agent of another, and thereby inducing 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 any loss or damage which he has incurred by so dealing.

Implied warranty of authority.---This section applies not only to the case of a person who represents that he has authority from another when he has no authority whatever, but to the case of a person who represents that he has a certain authority from another when he has authority of another discription. The duty is grounded on an implied warranty by the agent that he has authority, and the action, being in contract, lies even if the agent honestly believed he had authority, and against executors at common law. An agent who purports to report the other party's intentions does not thereby make himself that party's agent to deal with his original principal. It may be a breach of his original duty as agent if his report is incorrect, but he is not liable under the rule on an implied warranty of authority from the other party to conclude the transaction.

The word "untruly" may perhaps imply that the representation must be of matter of fact.

A public servant acting on behalf of the Government is not deemed to warrant his authority any more than to make himself personally liable on the contract, and for the same reason of policy.

If a man goes through the form of contracting as an agent but warns the other party that he has at the time no authority, he is obviously not liable under this section. It seems a nice question whether there is in such a case anything which the named principal can ratify, or anything more than an offer to him, liable to revocation like any ordinary proposal.

Representation must be effective.---The-liability of a pretended agent under this section does not arise, unless the representation that he is the agent of another is false, and also induces the person to whom the representation is made to deal with him as such agent. A representation by the defendant to the plaintiff that she is the duly authorised agent of her minor son does not render her liable under this section, if the plaintiff knows that the son is minor. For a minor cannot appoint an agent (S. 183, above), and consequently no warranty such as would support a suit could arise out of such a representation.

Measure of Damages.---If an agent contracts, without authority, to buy goods at a price in excess of their value, and the principal repudiates the contract as unauthorised, the measure of damages recoverable against the agent is the difference between the contract price and the market value of the goods. Similarly, where an agent, who was instructed to apply for shares in a certain company, applied for shares in another company by mistake, and they were allotted to the principal, who repudiated them shortly afterwards in the winding up of the company, it was held that, the principal being solvent and the shares valueless, the measure of damages payable by the agent to the liquidator was the full amount payable on the shares. If the third person reasonably takes proceedings against the principal for the enforcement of tile unauthorised transaction, the damages recoverable against the agent include the costs and expenses incurred by the third person in respect of the proceedings.

It is open to question whether in India the compensation recoverable under the section will be assessed on the same principle. The language used seems more appropriate to an action in the nature of an action of deceit than to one founded on a warranty.

Limitation.---It has been held by the High Court of Madras that a suit for damages against a person for untruly representing himself to be the agent of another is governed by Art. 115 of Sch. I of the Limitation Act.

236. Person falsely Contracting as agent not entitled to performance. A person with whom a contract has been entered into in the character of agent is not entitled to require the performance of it if he was in reality acting, not as agent, but on his own account.

Where the principal is not named the third party is contracting with the principal, whoever he may be, and there is no obvious reason why he should be presumed willing to deal with any unknown person in the world, provided that he is capable of being sued, and unwilling to deal with the nominal agent, the only person he knows in the matter. Accordingly a person who made a charter-party as agent for an unnamed freighter has been allowed to show that he was the freighter himself.

It does not seem possible, however, to read any such distinction into perfectly general language of the present section.

The High Court of Calcutta has held that this section is not restricted to cases where an agent purports to act for a named principal. If a person professing to act as an agent for an undisclosed principal enters into a contract with another, and there is no undisclosed principal in fact, the present section at once applies, and he cannot sue on the contract.

Conversely, where a man has contracted in writing in terms importing that he is the sole principal, e.g., made a charter-party "as owner of the ship A" another person cannot be allowed to sue on the contract as an undisclosed principal.

237. Liability of principal inducing belief that agent's unauthorised acts were authorised.---When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent's authority.

(a) A consigns goods to B for sale, and gives him instructions not to sell under a fixed price. C, being ignorant of B's instructions, enters into a contract with B to buy the goods at a price lower than the reserved price. A is bound by the contract.

(b) A entrusts B with negotiable instruments indorsed in blank B. sells them to C in violation of private orders from A. The sale is good.

Ostensible authority.---This section must, in point of fact, overlap S. 188 in many cases, but the principles are distinct. Under S. 188 the question is of the true construction to be put upon a real, though perhaps not verbally expressed, authority. Here the liability is by estoppel, and independent of the apparent agent having any real-authority at all; the question is only whether he was held out as being authorised; and this includes the case of secret restrictions on any existing authority of a well-known kind. It is a well-established principle that, if a person employs another as an agent in a character which involves a particular authority, he cannot by a secret reservation divest him of that authority. Good faith requires that the principal shall be held bound by the acts of the agent within the scope of his general authority, for he has held him out to the public as competent to do the acts and to bind him thereby. If a person authorise another to assume the apparent right of disposing of property in the ordinary course of trade, it must be presumed that the apparent authority is the real authority. It is clear that he (the agent) may bind his principal within the limits of the authority with which he has been apparently clothed by the principal in respect of the subject-matter; and there would be no safety in mercantile transactions if he could not.

Where a principal wrote to a third person saying he had authorised the agent to see him, and, if possible, to come to an amicable arrangement, and gave the agent instructions not to settle for less than a certain amount, it was held that he was bound by a settlement by the agent for less than that amount, the third person having no knowledge of the verbal instructions. An agent was authorised, in cases of emergency, to borrow money on exceptional terms outside the ordinary course of business, and it was held that the principal was bound by a loan on such exceptional terms made by a third person who had no notice that the agent was exceeding his authority, although no emergency had in fact arisen.

Illustration (b) seems to be founded on S. A. 228: "If an agent is entrusted with the disposal of negotiable securities or instruments, and he disposes of them by sale or pledge or otherwise, contrary to the orders, of his principal, to a bona fide holder without notice, the principal cannot reclaim them". It must be understood in the illustration that the instruments are not handed to B. merely for safe custody;.

The Privy Council case which, however, was not decided with reference to the section, affords an additional illustration. In that case the principal was held liable upon a contract entered into by his agent in excess of his authority the evidence showing that the contracting party might honestly and reasonably have believed in the existence of the authority to the extent apparent to him.

The same principle is applied in the class of cases where it is held that persons dealing with the incorporated companies, though they must take notice at their peril of disabilities imposed on the corporation by its special Act of Parliament, memorandum, or other public document of constitution, are entitled to assume that the directors or managers are duly exercising their authority according to the company's internal regulations. But this subject is much too special to be pursued in a commentary like the present.

Notice of excess authority.---No act done by an agent in excess of his actual authority is binding on the principal with respect to person having notice that the act is unauthorised. This proposition is so obvious that it would be superfluous to cite authorities, several of which relate to dealings with money and negotiable instruments in support of it. One case, however, where the notice was only constructive, may be mentioned. An agent, who was appointed by a power of attorney, borrowed money on the faith of a representation by him that the power gave him full authority to borrow, and misapplied it. The agent produced the power, which did not authorise the loan, but the lender did not read it, and made the advance in reliance on the agent's representation. It was held that the lender must be taken to have had notice of the terms of the power, and that the principal was not bound by the loan.

"On behalf of his principal."---A principal is not bound by any act done by his agent which he has not in fact authorized, unless it is done in the course of the agent's employment on his behalf, and is within the scope of the agent's apparent authority.

Acts done by employee in course of his employment with employer---Do not bind employer qua third person---Before an employer can be held liable to third person for acts of employee, it should be positively established on record that employee had express or implied authority on behalf of employer to so act and/or after employee had so acted employer had ratified acts of employee---Held, in instant case both these ingredients were completely missing and as such respondent No. I was not liable for payment of claimed amount to appellant.

Principal, liability of---Administrator having no power to transfer plots in housing scheme on behalf of Allotment Committee---S. 237 not attracted.

Apparent authority to enter into agreement conferred on agent---Contract entered into by agent valid even if he does not have actual authority. According to section 237 of the Contract Act, 1872 if the agent has apparent authority to enter into a particular contract on behalf of the principal the contract is valid even though in fact he has no such authority.

Any term in a contract of agency which places restrictions on the authority of an agent is unavailing against parties who are not aware of such terms if the circumstances are such as to confer an apparent authority on the agent to act on behalf of the principal.

Contract of agency not permitting agent to enter into contract---Oral authority of principal to enter into contract----Principal estopped from questioning the agreement. Where the contract of agency does not confer the power to enter into an agreement on behalf of the principal, and the principal has in fact orally agreed to a bargain being struck by his agent he cannot afterwards plead that he had no right to confer authority on the agent. The other party is entitled to rely upon the word of the principal and regard the contract as good and binding.

238. Effect, on agreement of misrepresentation or fraud by agent.---Misrepresentation made, or frauds committed, by agents acting in the course of their business for their principals, have the same effect on agreements made by such agents as if such misrepresentations or fraud had been made or committed by the principals; but misrepresentations made, or frauds committed, by agents, in matter which do not fall within their authority, do not affect their principals.

(a) A, being B's agent for the sale of goods, iduces C to buy them by a misrepresentation, which he was not authorised by B to make. The contract is voidable as between B and C at the option of C.

(b) A, the captain of B's ship, signs bills of lading without having received on board the goods mentioned therein. The bills of lading are void as between B and the pretended consignor.

Course of employment.---The accordance of this section with the modern common law is well shown in a judgment delivered in the Privy Council by Lord Lindley: "The law upon this subject cannot be better expressed than it was by the acting Chief Justice of [New South Wales] in this case. He said: 'Although the particular act which gives the cause of action may not be authorised, still if the act is done in the course of employment which is authorised, the master is liable for the act of his servant.'

Misrepresentation which will make the principal liable to an action for trespass, deceit or other substantive wrong will, of course, be a sufficient cause for the other party to avoid an agreement induced by it.

Illustration (a) seems to include both the case of the agent knowing but the principal not knowing the truth of the matter misrepresented, and the less obvious one of the agent making a statement without authority, but believing it to be true, while the principal in fact knows it not to be true. In English law, where the principal has not authorised the agent to make the statement, the principal having knowledge that the statement if made would be false, and the agent makes the statement innocently, there is no liability, but it is otherwise if the principal deliberately employs an innocent agent, suspecting that a question would be asked and hoping it would be answered in a certain way. It is clear law that if both principal and agent be innocent, there is no liability.

Illustration (b) is taken from a decision where the real question was as to the extent of the master's apparent authority. It would perhaps have been more appropriate to S. 237. "The authority of the master of a ship is very large, and extends to all acts that are usual and necessary for the use and enjoyment of the ship, but is subject to several well-known limitations...With regard to goods put board, he may sign a bill of lading, and acknowledge the nature and quality and condition of the goods :" but it is not usual for the master to give a bill of lading for goods not put on board. On the contrary, the general usage gives notice to all people that the authority is limited to such goods as have been put on board.

Fuller illustration of the kinds of acts done by agent which are deemed to be in the course of their business for their principals must be sought in special treatises on the Law of Principal and Agent, or in works on the Law of Torts.

The difficulties, which for some time were thought serious, arose partly from reluctance to hold any one answerable for fraud or willful wrong to which he had not actually been consenting, partly from a fallacious opinion that it was impossible for a corporation to be liable for fraud or any other wrong which, in an individual, implies a specific belief or intention. It seems no harder to suppose a corporation capable of deceiving than to suppose it capable of being deceived; and if any innocent individual must answer for the fraud of his agent, there is really less hardship in applying the same rule to a corporation.

Admission by Agent.---S. 18 of the Evidence Act provides that statements made by an agent to a party to any proceedings, whom the Court regards, under the circumstances of the case, as expressly or impliedly authorised to make them, are admissions; and S. 21 that admissions are relevant and may be proved as against the person who makes them. The Contract Act .is silent on the subject.

Statements made by an agent, though not expressly authorised, arc admissible against the principal if they have reference to the business on which the agent is employed on the principal's behalf at the time when they are made, and are made in the ordinary course of that employment. If an agent, employed to buy goods, acknowledges the receipt of them, that acknowledgement is evidence against the principal that they have been duly delivered. An acknowledgement by a wife, who manages a business on behalf of her husband, and purchases the goods required, as to the state of accounts between her husband and the persons supplying the goods, is evidence against the husband, and, if it is in writing and signed by the wife, will interrupt the operation of the Statute of Limitations.

Privilege from distress of goods in hands of agent.---Where an agent carries on a trade or business in which the public are invited to entrust their goods to him for the purpose of being sold or otherwise dealt with in the course of that trade or business, goods entrusted to him for any such purpose are, while on his premises, or on other premises hired by him for any such purpose, absolutely privileged from distress for rent. The rule does not extend to agents generally, but only to those, such as factors and auctioneers, who carry on a trade or business of a public nature; nor does the privilege attach to goods which at the time of the distress are on premises neither occupied nor hired by the agent, though they may have been sent there to be dealt with in the ordinary course of his trade or business.

Bribery of agent.---The rights of the principal against an agent in respect of bribes received in the course of the agency are dealt with in the commentary to S. 216. In addition to what is said there it may be mentioned that the receipt of a bribe by an agent justifies his immediate dismissal without notice, although the contract of agency may provide for its continuance for a specified time.

As against the person promising or giving anything in the nature of a bribe to an agent, the principal may avoid any contract made or negotiated by the agent, or in the making of which the agent was in any way concerned, whether he was in fact influenced by the bribery or not, it being conclusively presumed against the briber that he was so influenced.

It is not necessary that the bribery should have any direct relation to the particular transaction. A gift made in order to influence an agent .generally in favour of the giver is sufficient to render any transactions entered into by the agent voidable against the giver at the principal's option.

The principal may, if he thinks fit, affirm any contract which is voidable on the ground to bribery. In such case, and also where avoidance of the contract is impossible owing to his not having discovered the bribery soon enough, the principal is entitled to recover from the briber, as money had and received, the amount given or promised as a bribe if ascertained; or to sue him and agent, who are liable jointly and severally, for any loss sustained by reason of having entered into the contract, the damages being ascertained without reference to any sum which may have already been recovered from the agent as money received to the principal's use.

An agent cannot maintain any action for the recovery of money promised to be given to him by way of a bribe, whether he was induced by the promise to depart from his duty to the principal or not. Such a promise, being founded on a corrupt consideration, cannot be enforced by law.

Right of principal to follow property into hands of third persons.---Where the property of the principal is disposed of by an agent in a manner not expressly or ostensibly authorised, the principal is entitled, as against the agent and third person, subject to any enactment to the contrary, to recover the property, wheresoever it may be found.

Personal liability of agent to repay money received to principal's use.---An agent is not, as a general rule, personally liable to repay money received by him for the use of his principal, though he may not have paid it over to the principal, and the circumstances are such that the person paying the money is entitled, as against the principal, to have it repaid.

But an agent is personally liable to repay money paid to him under a mistake of fact, unless he has paid it over to the principal in good faith, or dealt to his detriment with the principal in the belief that the payment was a valid one, before receiving notice of the intention of the payer to demand repayment. Merely crediting the principal in account is not sufficient to discharge the agent. There must be an actual change of circumstances to the agent's detriment in consequence of the payment. Similar principles apply where the money is paid in respect of a voidable transaction, or for a consideration which totally fails, or under duress, or in consequence of any fraud or wrong to which the agent is not a party. If the money is obtained by duress, or by means of any fraud or wrong, to which the agent is a party or privy, he is personally liable to repay it whether he has paid it to the principal or not. Payment over is no defence in the case of wrong-doers. An agent is also personally liable notwithstanding that he may have paid the money over in good faith, if it was paid to him in regard to a contract made in his personal capacity.

Money received by agent from a third person by fraud.---Where an agent receives money from a third person by fraud, and pays it to his principal in his account with him, the third person is not entitled to recover it from the principal unless the latter knew or had means of knowledge that it was plaintiff's money.

Fraud---Sale of goods by agent receiving secret commission---Contract void---Principal can claim the advantage gained or profit made by the buyer from the goods so bought by him. The goods were sold by an agent of the seller on receiving a secret commission. The principal of the agent claimed that on account of fraud, the contract of sale was void and refused to deliver the goods remaining with them for which payment had been made on a suit by the purchaser.

Held: When a contract is found to be based on fraud, it becomes a voidable transaction and the affected party can repudiate it. The result of repudiation is that the aggrieved party will be restored to the original position and the party at fault can be compelled either to return the property or to compensate the aggrieved party. Therefore, the plaintiffs were granted damages actually calculated on the profit they had earned on the resale of goods and the defendant was ordered to pay the balance with him less the compensation.