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

Mahesh, a company's authorised agent, signs a commercial contract with Naveen Enterprises on behalf of the disclosed principal, Jaipur Steels Ltd, which can be sued. The contract has no clause on the agent's personal liability. Naveen Enterprises wants to enforce the contract. Under the Indian Contract Act, 1872, against whom is it ordinarily enforced?

It is ordinarily enforced against Jaipur Steels Ltd. Under the Contract Act, contracts made through an agent have the same legal consequences as if the principal acted in person, and absent a contrary contract the agent is not personally bound.

  1. AMahesh personally, as the signatory
  2. BJaipur Steels Ltd, as if it had contracted in personCorrect
  3. CBoth Mahesh and Jaipur Steels Ltd equally
  4. DNeither, unless the contract is registered

Explanation

Contracts entered into through an agent are enforced and have the same legal consequences as if the principal had contracted in person. With a disclosed, suable principal and no contrary contract, the agent is not personally bound. So Mahesh is not the proper party.

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