Section 229 of ICA : Section 229: Consequences Of Notice Given To Agent

Explanation using Example

Imagine a scenario where Mr. John appoints Ms. Smith to negotiate the purchase of a property on his behalf. During the negotiations, Ms. Smith is informed by the seller that there is an outstanding mortgage on the property, which is not yet cleared. Ms. Smith does not communicate this information to Mr. John, and the purchase is completed.

Later, when the mortgage issue comes to light, Mr. John is held responsible for the outstanding mortgage because Ms. Smith, his agent, had knowledge of it during the transaction. This situation falls under the principle of Section 229 of The Indian Contract Act, 1872, where the knowledge of the agent is considered as the knowledge of the principal in the course of business conducted by the agent.