C informed A that the tenants were paying rents regularly with immaterial exceptions.
It is immaterial whether the misrepresentation or fraud has been committed for the benefit of the principal or of the agent himself.Įxample: A offered to buy a residential flats consisting of number of flats in it and enquired C, the property manager of B, whether all the tenants were paying their rents regularly. The principal is liable for the misrepresentation or fraud committed by his agent while acting in the course of his business. It was held that the purchaser is not affected by A’s instructions to the auctioneer not to sell below a certain price.ĥ. B sold the house by auction to a third party for an amount less than the amount authorized by A. The principal is liable for the unauthorized acts of the agent, if the principal has created an impression on the third party by his conduct, that the agent has the authority to do such acts.Įxample: A, an owner of a house held out that B, the auctioneer had authority to sell the house. Held, the knowledge of the agent that X was one-eyed man should be attributed to the company and that X could recover $500 when he lost the other eye. At the time of the insurance, it appeared that X was in fact a one-eyed man. Further, if the agent had committed a fraud on the principal, the rule of this section will not apply.Įxample: X engaged Y’s agent to insure him against loss of eye-sight for $500 in case of total loss of eye-sight and $250 in case of loss of only one eye. However, if the knowledge is not acquired by the agent in the course of his employment, it cannot be imputed to the principal. Thus, the knowledge of the agent is the knowledge of the principal. The principal is bound by the notice given to the agent in the course of business. In this case, the principal may repudiate the whole transaction. But B purchased 500 sheeps and 200 lambs, for a sum of Rs.6,000. So if the agent does something in excess of his powers, the transaction is not binding on the principal.Įxample: A authorized B, an agent to buy 500 sheeps.
He is in such a case entitled to repudiate the whole transaction. Where the work cannot be separated – When an agent does more than what he is authorized to do, and such act cannot be separated from that which is within his authority, the principal is not bound by the transaction. A is bound to pay the premium for the policy on the ship, but not the premium for the policy on the cargo.Ģ. B procures a policy for Rs.4,000 on the ship and another for Rs.6,000 on the cargo. Where the work can be separated – Where an agent exceeds his agency to do the work of the principal, the principal is bound by that part of the work which is within his authority if it can be separated from the part of the work which is beyond his authority.Įxample: A, owner of a ship and cargo, authorizes B to procure an insurance policy for Rs.4,000 on the ship. It can be discussed under two heads as shown below:ġ. This receipt of money is binding on A, and C is discharged from his obligation to pay this amount to A.Ģ. B received from C a sum of money due to A. However, the act done should be lawful.Įxample: A authorized his agent, B, to collect money on his behalf. If an act is carried on by an agent within his authority, his acts are binding on the principal. Acts of an Agent within the Scope of his Authority The rights and liabilities of a named principal for the acts of his agent may be discussed as below: 1.
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