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

Under a distribution agreement, Rao, agent of Kulkarni Pharma, bought raw material from Dutta Chemicals, disclosing his agency and the principal's name. The contract is silent on personal liability. Dutta sues Rao personally for the price. Which is the correct approach?

Rao is not personally bound. Section 226 places the contract's consequences on the principal, and Section 230 says an agent is not personally bound without a contrary contract. None of the presumption cases applies, as the principal was disclosed and can be sued.

  1. ARao is personally bound because he signed the contract
  2. BRao is personally bound because any agent is liable for contracts he makes
  3. CRao is not personally bound absent a contrary contract, since consequences fall on the principal under Sections 226 and 230Correct
  4. DRao is bound because Dutta was unaware of the agency

Explanation

Section 226 attaches the consequences of the contract to the principal. Under Section 230, absent a contract to the contrary, an agent is not personally bound, and none of the presumed cases applies here as the principal is disclosed and suable. So the suit against Rao fails.

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