Law: Contract, Act, 1872

Section: S. 237

(On appeal from the judgment and decree of the High Court of West Pakistan, Lahore, dated the 25th February 1959, in Regular First Appeal No. 58 of 1953/Civil Miscellaneous No. 302-S of 1959).   (a) Contract Act (IX of 1872), S. 237-Apparent authority in agent to enter into contract, though in fact he has no such authority-Contract entered into by agent on behalf of principal Valid-Term in contract of agency placing restrictions on authority of agent-Unavailing against third parties who are unaware of such restrictions-[Term requiring consent in writing of principal to contracts entered into by agent on principal's behalf]-Estoppel Principal estopped, where in spite of such term, he has agreed orally to a contract-Evidence Act (I of 1872), S. 115.   According to section 237 of the Contract Act, 1872 if the agent has apparent authority to enter into a particular contract on behalf of the principal the contract is valid even though in fact he has no such authority.   Any term in a contract of agency which places restrictions on the authority of an agent is unavailing against parties who are not aware of such term if the circumstances are such as to confer an apparent authority on the agent to act on behalf of the principal.   A term, for instance, that written consent of the principal was essential before a contract could be entered into by the agent on behalf of the principal binds the agent. It does not bind the principal who is entitled at any time to waive it. If the principal has given directions to the agent that he is not to act on his behalf in the absence of certain circumstances, the principal can still confer upon him authority in the absence of those circumstances for acting on his behalf. The term between the parties that the agent will not without the written consent of the principal enter into a contract on his behalf does not create a law, which debars the principal henceforth from conferring authority on the agent in violation thereof. The law allows the principal to confer authority by word of mouth, and this right of his is not at all affected by a condition, which he has himself imposed on his agent. This condition he…