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Section 238, Contract Act 1872: Effect, On Agreement, Of Misrepresentation Or Fraud By Agent

Section 238 under the Chapter X (Agency - Appointment and authority of agents) of the Contract Act, 1872 of India - 'Effect, on agreement, of misrepresentation or fraud by agent', is reproduced hereunder:—

“Misrepresentations made, or fraud committed, by agent acting in the course of their business for their principals, have the same effect on agreements made by such agents as if such misrepresentations of frauds had been made, or committed by the principals; but misrepresentations made, or frauds committed, by agents, in matters which do not fall within their authority, do not affect their principals.

Illustrations

(a) A, being B's agent for the sale of goods, induces C to buy them by a misrepresentation, which he was not authorised by B to make. The contract is voidable, as between B and C, at the option of C.

(b) A, the captain of B's ship, signs bills of lading without having received on board the goods mentioned therein. The bills of lading are void as between B and the pretended consignor.”

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