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

Meera Textiles Ltd appoints Rajan as its agent to sell cotton yarn. Rajan, acting within authority, sells yarn to Sundaram Traders, who know Rajan is an agent but not who the principal is. When Sundaram defaults on payment, who is entitled to claim the price from Sundaram under Section 226?

Meera Textiles Ltd, the principal, can claim the price. Under Section 226, a contract made through an agent is enforceable as if the principal had made it personally, even where the buyer knew only that the seller was an agent and did not know who the principal was.

  1. ARajan alone, since he signed the contract
  2. BMeera Textiles Ltd, the principalCorrect
  3. CNeither, because the principal was undisclosed
  4. DRajan and Meera Textiles jointly, only after a court order

Explanation

Section 226 says contracts made through an agent are enforced as if the principal had made them in person. Illustration (a) covers a buyer who knows the seller is an agent but not the principal; the principal is still the person entitled to claim the price. Option A ignores this rule.

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