BUSINESS ADMINISTRATION
BUSINESS LAW
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the agent and the principal
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the agent and the third party
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the principal and the third party
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the employee and the third party
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Detailed explanation-1: -In a contract of agency, an agent deals with the third parties on behalf of his principal. He enters into contracts with the third parties and is responsible for his acts to the principal. However, there are also some Responsibilities of Principal to Third-parties for the acts of the agent.
Detailed explanation-2: -Position of Third Party According to Section 231 of Indian Contract Act, 1872, a third person has a right to enforce a contract against both the agent as well as the principal. The third party can proceed with a suit against the Principal for any loss suffered as a result of the principal’s failure to perform the duty.
Detailed explanation-3: -According to the Section 230 of the Indian Contract Act, when an agent acts on behalf of his principal in his dealings with a third person, a contractual relationship between the principal and the third person is created and the agent is not personally liable. It is the principal who is liable to the third person.