Section 231 The Indian Contract Act, 1872
Section 231 – The Indian Contract Act, 1872
"Rights of persons dealing with agent personally liable."
Bare Act Language:
“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.”
✅ Explanation:
Section 231 addresses situations where an agent is personally liable (not just acting on behalf of the principal). In such cases:
The third party (who dealt with the agent) can choose to:
Sue the agent, or
Sue the principal, or
Sue both — jointly.
This gives legal protection to the third party by allowing them to recover damages or enforce performance from either the agent or the principal.
🧾 When is an Agent Personally Liable?
As per Section 230, an agent is not personally liable unless:
He does not disclose his principal's name.
He contracts for a foreign principal.
There’s a trade custom making the agent personally liable.
The agent expressly agrees to be personally liable.
So, when any of these apply, Section 231 kicks in, giving the third party the right to proceed against either party.
📌 Example:
A (agent) makes a contract with C without disclosing that he is acting on behalf of B (principal).
C finds out later that B is the principal.
➡ Under Section 231, C can choose to:
Hold A (agent) responsible,
Hold B (principal) responsible,
Or hold both liable.
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