Section 237: Liability of principal inducing belief that agent's unauthorized acts were authorized.

The Indian Contract Act, 1872Central Act · Act 9 of 1872

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.

Where this provision sits

Act	The Indian Contract Act, 1872
Section	237
Marginal note	Liability of principal inducing belief that agent's unauthorized acts were authorized.
Jurisdiction	Central
Status	In force as published by the source
Judgments citing it	1

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