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

While drafting an agency-based supply contract for Vihaan Agro, a company secretary wants a clause consistent with Section 226. Which clause best reflects it?

The clause stating that rights and obligations from the agent's authorised acts bind and are enforceable by the principal as if the principal had acted personally reflects Section 226, which gives agent's contracts the same legal consequences as the principal's own acts.

  1. ARights and obligations arising from acts of the agent within authority shall bind and be enforceable by the principal as if done by the principal personallyCorrect
  2. BThe agent alone shall be entitled to sue and be sued on all contracts made on behalf of the principal
  3. CPayment to the agent shall not discharge the customer unless also made to the principal
  4. DAny debt owed by the agent personally shall be set off against the principal's claims

Explanation

Section 226 provides that contracts through an agent and obligations from his acts are enforced with the same consequences as if the principal had acted in person. Options B, C and D contradict this and the illustrations on discharge by payment to the agent and on set-off.

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