Section 238 Indian Contract Act 1872
Section 238 of the Indian Contract Act 1872 is about Effect, on agreement, of misrepresentation or fraud by agent. It is under “Effect of agency on contracts with third persons” of CHAPTER X of the Act. CHAPTER X is titled AGENCY.
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 frauds had been made or committed by the principals; but misrepresentations made, or frauds committed, by agents, in matters which do not fall within their authority, do not affect their principals.
Illustrations
(a) A, being B’s agent for the sale of goods, induces C to buy them by a misrepresentation, which he was not authorized 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 cosignor.
See also:
Section 237 Indian Contract Act 1872 (Liability of principal inducing belief that agent’s unauthorized acts were authorized)
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