Section 237 in The Indian Contract Act, 1872

Title: Liability of principal inducing belief that agent's unauthorized acts were authorized.

Description: When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent's authority. Illustrations (a) A consigns goods to B for sale, and gives him instructions not to sell under a fixed price. C, being ignorant of Bs instructions, enters into a contract with B to buy the goods at a price lower than the reserved price. A is bound by the contract. (b) A entrusts B with negotiable instruments endorsed in blank. B sells them to C in violation of private orders from A. The sale is good.

Title: Effect, on agreement, of misrepresentation or fraud by agent.

Description: Misrepresentation made, or frauds committed, by agents acting in the course of their business for their principals, have the same effect on agreements made by such agents as if such misrepresentations or frauds had been made or committed by the principals; but misrepresentations made, or frauds committed, by agents, in matters which do not fall within their authority, do not affect their principals. Illustrations (a) A, being B's agent for the sale of goods, induces C to buy them by a misrepresentation, which he was not authorized by B to make. The contract is voidable, as between B and C, at the option of C. (b) A, the captain of B's ship, signs bills of lading without having received on board the goods mentioned therein. The bills of lading are void as between B and the pretended cosignor.

Title: Repealed

Description: ['Partnership' defined.] Rep. by s. 73 and the Second Schedule, ibid.

Title: Repealed

Description: ['Partnership' defined.] Rep. by s. 73 and the Second Schedule, ibid.

Title: Repealed

Description: [Property left in business by retiring partner, or decreased partner's preventative.] Rep. by s. 73 and the Second Schedule, ibid.

CHAPTER 10 AGENCY – EFFECT OF AGENCY ON CONTRACTS WITH THIRD PERSONS