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CS Professional · Drafting, Pleadings and Appearances · Drafting of Commercial Contracts

Ishaan, an agent, signs a distribution contract with Pioneer Pharma for Rao Medicals without disclosing Rao Medicals' name as principal. The contract has no clause on personal liability. Which statement is correct?

Ishaan is presumed to be personally bound and entitled to enforce the contract. Although an agent is ordinarily not personally liable, Section 230 presumes a contract to the contrary where the agent does not disclose the principal's name, so the nondisclosure creates personal liability.

  1. AIshaan cannot be bound personally because an agent is never bound by principal's contracts
  2. BOnly Rao Medicals can ever be liable, as the agent acts as principal
  3. CIshaan is presumed to be personally bound and able to enforce, since the principal's name was not disclosedCorrect
  4. DThe contract is invalid for want of a disclosed principal

Explanation

Section 230 states that, absent a contrary contract, an agent is not personally bound, but a contract to the contrary is presumed where the agent does not disclose the principal's name. Hence Ishaan is presumed personally bound and entitled to enforce. The first option states only the general rule and ignores the exception.

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