Sections 234 to 236 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Three short sections close the Act's treatment of agent, principal and third person. Section 234 stops a third person who has induced the agent, or the principal, to rely on the other being exclusively liable from later suing the one he led to rely. Section 235 makes a person who untruly represents himself to be an authorised agent liable for loss if the alleged employer does not ratify. Section 236 denies performance to a person who contracted as agent when in reality he acted on his own account.
A third person who has induced the agent to act on the belief that the principal only will be held liable, or induced the principal to act on the belief that the agent only will be held liable, cannot afterwards hold liable the agent or the principal respectively (s.234). A person untruly representing himself to be the authorized agent of another, and thereby inducing a third person to deal with him, is liable to make compensation for loss or damage if his alleged employer does not ratify his acts (s.235). A person with whom a contract was made in the character of agent is not entitled to require performance if he was in reality acting on his own account (s.236). None of the three sections prints an illustration.
Section 234: inducing a belief of exclusive liability
"When a person who has made a contract with an agent induces the agent to act upon the belief that the principal only will be held liable, or induces the principal to act upon the belief that the agent only will be held liable, he cannot afterwards hold liable the agent or principal respectively."
| If the third person induces | The belief | He cannot afterwards hold liable |
|---|---|---|
| The agent | That the principal only will be held liable | The agent |
| The principal | That the agent only will be held liable | The principal |
The word "respectively" pairs them. The section builds on section 233, which lets a third person hold the agent, the principal or both liable where the agent is personally liable. Our article on sections 231 to 233 covers that. Section 234 takes away that choice where the third person has induced the belief. The section speaks of "induces" the belief; it does not set out what conduct counts as inducing.
If you have a dispute about whom you can hold liable, a legal consultation can help you look at what was said and done.
Section 235: the pretended agent
"A person untruly representing himself to be the authorized agent of another, and thereby inducing a third person to deal with him as such agent, is liable, if his alleged employer does not ratify his acts, to make compensation to the other in respect of any loss or damage which he has incurred by so dealing."
The elements are:
- The person untruly represents himself to be the authorised agent of another.
- He thereby induces a third person to deal with him as such agent.
- The alleged employer does not ratify his acts.
- The third person has incurred loss or damage by so dealing.
The consequence: he must make compensation to the third person. The link to ratification matters: if the alleged employer ratifies, section 196 gives the acts the same effects as if authorised, and the liability in section 235 is conditional on the absence of ratification. Our article on sections 196 to 200 covers ratification. The section says "untruly", and it does not use the word "fraud"; it does not say that the pretended agent must have known he was untrue.
Section 236: a person falsely contracting as agent
"A person with whom a contract has been entered into in the character of agent, is not entitled to require the performance of it, if he was in reality acting, not as agent, but on his own account."
This section looks at the other side of the pretence. The person in whose "character of agent" the contract was made cannot require performance if in reality he was acting on his own account. The section does not say what the third person may do in that case beyond that; it speaks of the right to require performance.
A modern example (ours, not the Act's)
Yusuf tells a supplier, Bhatia Hardware, that he is the authorised purchasing agent of Skyline Constructions and places an order for steel rods "for Skyline". Skyline never authorised him. Bhatia delivers to the site and loses money because Skyline refuses to pay. If Skyline does not ratify, Yusuf, who untruly represented himself as the authorised agent, is liable under section 235 to compensate Bhatia for the loss or damage incurred by so dealing. If Skyline ratifies, section 196 applies instead.
In another case, a contractor, Latif, tells a customer that he is buying the building material "on behalf of the owner", getting trade terms, but in reality he is acting on his own account. Under section 236, Latif, with whom the contract was made in the character of agent, is not entitled to require performance of it.
On section 234: suppose a builder, after contracting with a site agent, tells the agent in writing "we will look to your principal alone", and the agent acts on it by not seeking a guarantee from his own side. The builder cannot afterwards hold the agent liable.
What can the parties change?
Section 234 depends on what the third person does to induce a belief; a written statement of who will be liable can make that clear. Sections 235 and 236 depend on representations about authority and capacity. A principal can protect against pretended agents by telling known suppliers who may place orders in his name and by asking them to verify. A supplier can ask for written authority. The sections themselves do not mention contrary agreement.
Practical points
- Suppliers: ask for written authority before delivering to someone who says he is an agent.
- Principals: if someone acts in your name without authority, decide quickly whether to ratify or disown; section 235 liability depends on non-ratification.
- Third persons: be careful what you say about whom you will look to. Section 234 can bind you to the belief you induce.
- Agents: do not describe yourself as agent when you act on your own account.
Need help where someone claimed to act as an agent?
If you suffered loss dealing with a person who claimed to be an authorised agent, or you are facing a claim that you induced a belief about who would be liable, our legal consultation service can help you review the facts against sections 234 to 236. Other laws may also apply.
Key takeaways
- A third person who induces the agent to believe that the principal only will be held liable (or the principal to believe that the agent only will be held liable) cannot afterwards hold the agent (or principal) liable (s.234).
- A person who untruly represents himself as an authorised agent and thereby induces a third person to deal with him is liable to compensate for loss if the alleged employer does not ratify (s.235).
- A person contracted with in the character of agent cannot require performance if in reality he acted on his own account (s.236).
- No illustrations are printed under these sections.
Read next
- Sections 231 to 233: undisclosed principal and third-party rights against agent
- Sections 237 and 238: principal inducing belief and fraud by agent
- Agency: sections 182 to 238
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.