Liability of principal inducing belief that agent‟s unauthorized acts were authorized
Chapter 11: Agency
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.
Illustrations.
(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 endorsed in blank. B sells them to C in violation of private orders from A. The sale is good.
The Indian Contract Act, 1872 (Act No. 9 of 1872). From the updated text on India Code, with later amendments. Being checked against the official copy; amendment notes are not shown yet.
Related sections
- 232Performance of contract with agent supposed to be principal
- 233Right of person dealing with agent personally liable
- 234Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable
- 235Liability of pretended agent
- 236Person falsely contracting as agent not entitled to performance
- 238Effect, on agreement, of misrepresentation or fraud by agent