Section 230 of ICA : Section 230: Agent Cannot Personally Enforce, Nor Be Bound By, Contracts On Behalf Of Principal

Explanation using Example

Imagine Sarah hires Tom, a real estate agent, to sell her house. Tom finds a buyer, Jenny, and signs a sale agreement with her on behalf of Sarah. Later, Jenny discovers some issues with the house and wants to sue. Normally, Jenny should sue Sarah, the principal, as Tom was acting on her behalf. However, if Tom never mentioned Sarah's name during the negotiations and Jenny thought she was dealing directly with Tom, Jenny can hold Tom personally responsible for the contract. This is because, as per Section 230 of The Indian Contract Act, 1872, an agent like Tom would be presumed to have the authority to be personally bound in the contract since he did not disclose his principal, Sarah.