Section 232 Indian Contract Act 1872
Section 232 of the Indian Contract Act 1872 is about Performance of contract with agent supposed to be principal. It is under “Effect of agency on contracts with third persons” of CHAPTER X of the Act. CHAPTER X is titled AGENCY.
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.
Illustration
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.
See also:
Section 231 Indian Contract Act 1872 (Rights of parties to a contract made by agent not disclosed)
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