In the absence of any contract to that effect, an agent cannot personally enforce contracts entered
into by him on behalf of his principal, nor is he personally bound by them. Presumption of contract to contrary, Such a contract shall be presumed to exist in the following case,
where the principal, though disclosed, cannot be sued.
The term disclosed principal means, A principal whose identity is known to the third party at the
time the agent makes a contract for the principal with that third party. Section 230(3) of the Act suggests that when the principal is disclosed and the principal cannot be sued. And then there is a
presumption that the agent is personally liable According to this act. If it is satisfied then Section
233 of the Contract Act gives the option to the party to sue as the agent/principal and both. But,
the condition precedent is that the case should fall under Section 230(3) of the Contract Act.
Therefore, what is important here is that it must be established that the principal cannot be sued
in this particular matter.
In Travancore National Bank Subsidiary Co., Ltd.(in liquidation) and another, [1943(1) MLJ
425], the principal being an unregistered union cannot be sued, the Court held that by virtue of
Section 230(3) of the Contract Act agent can be made personally liable.