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

Kiran Exports owes Anil Rs 40,000. Anil authorises his agent Bhaskar to collect money due to him. Kiran pays Rs 40,000 to Bhaskar, who is within his authority. Anil later demands the money from Kiran again. What is the legal position?

Kiran is discharged. Under Section 226, obligations arising from an authorised agent's acts have the same consequences as if the principal had acted personally, so payment to Bhaskar, who had authority to receive money, discharges Kiran's debt to Anil.

  1. AKiran must pay again, since payment was not made to Anil personally
  2. BKiran is discharged, as payment to the authorised agent has the same effect as payment to AnilCorrect
  3. CKiran is discharged only if Anil ratifies the receipt in writing
  4. DKiran must pay again unless Bhaskar proves he remitted it to Anil

Explanation

Section 226 treats acts done by an agent as if done by the principal. Illustration (b) states that where an agent authorised to receive money receives it from the debtor, the debtor is discharged. No ratification or proof of remittance is required, so the other options are wrong.

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