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Chapter X - Agency

Section 230

Section 230: Agent’s personal contractual liability

An agent ordinarily neither personally enforces nor is personally bound by the principal’s contract, unless a contract to that effect exists.

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Need advice on Section 230?

This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.

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Statutory text

Bare law

In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Presumption of contract to contrary—Such a contract shall be presumed to exist in the following cases:—

(1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad;

(2) where the agent does not disclose the name of his principal;

(3) where the principal, though disclosed, cannot be sued.

Rule and business relevance

A contrary contract is presumed in three stated cases: goods transactions for a merchant resident abroad, an unnamed principal, and a disclosed principal who cannot be sued.

Limits and related provisions

These are presumptions within a contract-sensitive rule. Do not declare every agent immune or every agent in a cross-border transaction invariably personally liable without reviewing the facts.

Hypothetical business example

Hypothetical example: An intermediary contracts for an unnamed principal. The parties examine the statutory presumption and the actual contract before deciding personal liability.

Practical decision flow

Identify whether the contract is on behalf of a principal.

Read any terms about personal enforcement or liability.

Check each of the three statutory presumption categories.

Check the applicable legal framework

This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.

Practical checklist

Do

  • Identify whether the contract is on behalf of a principal.
  • Read any terms about personal enforcement or liability.
  • Check each of the three statutory presumption categories.

Avoid

  • These are presumptions within a contract-sensitive rule. Do not declare every agent immune or every agent in a cross-border transaction invariably personally liable without reviewing the facts.

Glossary

Personal liability
The agent’s own responsibility under the contract.
Contrary-contract presumption
The presumed agreement described for the three listed cases.

Frequently asked questions

Is agent immunity absolute?

No. Contract terms and the stated presumptions matter.

What if the principal’s name is not disclosed?

That is one category in which a contrary contract is presumed.

Are all foreign transactions described?

The specific category is sale or purchase of goods for a merchant resident abroad.

Need help applying this provision to your situation?

Contact Bizeneed

Last updated 10 October 2026