Pakistan study notes for Matric, Intermediate, B.A, B.COM BSC, M.A, BCS. Free Pakistani Urdu educational school, colleges and University notes.



An agent is personally liable to the third party in the following cases:


1.         When contract expressly provides: A party while contracting with an agent may expressly stipulate that, in case of breach of contract, he would hold the agent personally liable in case of breach of contract, and if the agent agrees to it, he is personally liable.


2.         When agent act for a foreign principal-Section 230, para 2: When an agent makes a contract for a merchant residing abroad the agent is personally liable.


3.         When agent act for undisclosed principal, Section 230, para 2: When an agent acts for an undisclosed principal he is personally liable. The third party on discovering the identity of the principal sue the principal also.


4.         When agent acts for principal who cannot be sued- Section 230 para 2: Where the name of the principal is disclosed but he cannot be sued, as being minor or idiot, the agent is personally liable because the credit is presumed to have been given to the agent and not to the principal.


5.         When agent signs contract in his own name: When an agent signs a contract in his own name without disclosing that he is acting as an agent, though known to be an agent, is understood to have contracted personally.

6.         When agent acts for a non-existent principal: When the promoters act for a company yet to be registered, they are personally liable for all such acts.


7.         When agent is liable for breach of warranty of authority: When a person acts as an agent but has no authority from the alleged principal, or exceeds the authority, he is personally liable.

8.         When agent pays or receives money by mistake or fraud: When an agent receives money by mistake or fraud from third party he is personally liable to the third party. Likewise, when an agent has paid money by mistake or fraud to third party, the agent can himself sue for the recovery of the amount.

9.         When authority is coupled with Interest: When an agent has an interest in the subject matter of the contract made by him with a third party, his authority is coupled with interest. He can sue and be sued to the extent of his interest.


10.       When agent is personally liable under trade usage or customs: An agent may be personally liable under customs or usages of a trade. Section 233 lays down in such a case that the third party may hold liable either agent or his principal or both.

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