Section 233 The Indian Contract Act, 1872
📜 Section 233 – The Indian Contract Act, 1872
🔍 Section 233 – Right of Person Dealing with Agent Personally Liable
"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:
This section provides protection to third parties dealing with an agent who is personally liable under a contract. It gives the third party the option to:
Sue the agent, or
Sue the principal, or
Sue both.
This applies only in cases where the agent is personally bound by the contract—either due to the nature of the contract or because of an express or implied agreement.
🔑 Key Points:
Normally, the principal is liable for contracts entered into by the agent.
However, if the agent does not disclose the principal, or if the agent agrees to be personally liable, then the third party can enforce the contract against the agent too.
This section gives the third party a choice of whom to hold liable.
🧠 Illustration:
If A contracts with B, who is acting as an agent but does not disclose that he is acting on behalf of C (the principal), then A may hold B personally liable.
If B later reveals that he was acting for C, A may then choose to sue C instead, or both.
🧑⚖️ Case Law Reference:
K.D. Kamath & Co. v. C.I.T., AIR 1971 SC 1644 – The Supreme Court clarified situations where personal liability of the agent arises and when the third party can invoke Section 233 to hold either or both liable.
RELATED Blog
0 comments