Source: 6)b)i)4m,MDTP10, 6)b)i)4m,MTP2,Jan2025, 6)b)i)4m,Sept20244 Marks
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Question Scenario

Answer the following as per the provisions of the Indian Contract Act, 1872:\ni) 'Agent cannot personally enforce, nor be personally bound by, contracts on behalf of the principal' however there are some exceptions to this general rule, explain.

Estimated Writing Time: 7 mins Try in Practice Mode

Suggested Answer

Agent cannot personally enforce, nor be bound by, contracts on behalf of principal.\nEXCEPTIONS: In the following exceptional cases, the agent is presumed to have agreed to be personally bound: \n(1) Where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad/foreign principal: – When an agent has entered into a contract for the sale or purchase of goods on behalf of a principal resident abroad, the presumption is that the agent undertakes to be personally liable for the performances of such contract. \n(2) Where the agent does not disclose the name of his principal or undisclosed principal; (Principal unnamed): when the agent does not disclose the name of the principal then there arises a presumption that he himself undertakes to be personally liable. \n(3) Non-existent or incompetent principal: Where the principal, though disclosed, cannot be sued, the agent is presumed to be personally liable. \n(4) Pretended agent – if the agent pretends but is not an actual agent, and the principal does not rectify the act but disowns it, the pretended agent will be himself liable. \n(5) When agent exceeds authority- When the agent exceeds his authority, misleads the third person in believing that the agent he has the requisite authority in doing the act, then the agent can be made liable personally for the breach of warranty of authority.

Exam Strategy Tip

When answering law questions in the CA Foundation exam, follow the "Provision -> Facts -> Conclusion" structure for maximum marks. Ensure to state the relevant sections where applicable to earn bonus marks from the evaluator.

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