Indian Contract Act, 1872 · Chapter X: Agency · Effect of agency on contracts with third persons
Section 232: Performance of contract with agent supposed to be principal
In plain words
Where a person contracts with an agent without knowing or having reason to suspect the agency, the principal can only get performance subject to the rights and obligations between the agent and that person.
Example: A owes B 500 rupees and sells B rice worth 1,000 rupees, secretly as C's agent. C cannot make B take the rice without allowing B to set off A's debt.
A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.
Official text
Where one man makes a contract with another, neither knowing nor having reasonable ground to suspect that the other is an agent, the principal, if he requires the performance of the contract, can only obtain such performance subject to the rights and obligations subsisting between the agent and the other party to the contract.
Illustration
A, who owes 500 rupees to B, sells 1,000 rupees worth of rice to B. A is acting as agent for C in the transaction, but B has no knowledge nor reasonable ground of suspicion that such is the case. C cannot compel B to take the rice without allowing him to set-off A's debt.
Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.
Supreme Court judgments citing the section 232
No Supreme Court judgment in our database cites this section yet.