On of the presumption of section 230 is the incompetent principal ,but if there exist a incompetent principle ,say minor, then how will it be a valid contract of agency?
One of the presumption of sec 230 is the incompetent principal But sec183 provides that only competent person can be become a prinicpal. So how does this persumption of section 230 be valid.?ie how can the third party sue the agent since there no valid contract of agency as per sec 183?
Thread StarterSwathi Krishna
The 3rd point of presumption
Here the section talks about a situation where at the time of entering into the agency contact, the principal was competent, however, later on he becomes incompetent ( Eg : Accident causing amnesia) In such case, after the principal becomes incompetent, if agent takes any action, then he himself will be liable.
In case a person enters into contact of agency with a minor/incompetent principal, then such contact is void as principal cannot be incompetent. The sections relating to rights and liability of agent and principal will not be applicable. (As you mentioned correctly) However, section 230 says that in case someone still enters into an agency contact with an incompetent/minor person, then such incompetent/minor person will be protected from any liability coming from such arrangement. And the person who acting as agent will be bound for losses and damages. Moreover, in case incompetency occurs later in a valid contract of agency, then also protection will be given to the incompetent principal. This presumption in Sec 230, basically gives protection to incompetent person named as principal.
In simple language, sec 230 says that "In case principal is disclosed but he Cannot be sued (ie, he is incompetent or non existent), it will be presumed that there is a contract saying agent will be personally liable and bound by all actions in the arrangement " Thus, in such case, agent will be liable because of this presumed contract of personal liability (& not agency contact which is void)