Cases in which a contract to the contrary exists for an agent to be presumed as a personally liable are:
1. Where the agent expressly agrees:
If an agent, while contracting with a third party, expressly agrees to be personally liable on the contract, he can be held personally liable for any breach of contract.
ADVERTISEMENTS:
2. Where the agent acts for a foreign principal:
Where an agent contracts for the sale or purchase of goods for a merchant residing abroad, he is presumed to be personally liable (Sec. 230).
3. Where the agent acts for an unnamed principal:
Where an agent acts for an unnamed principal, he is personally liable to the third party, if he declines to disclose the identity of the principal or if he could not disclose the identity of the principal, say, because of his sudden death.
Image Source:ussigncrafters.com
ADVERTISEMENTS:
4. Where the agent acts for an undisclosed principal:
Where an agent acts for an undisclosed principal and contracts in his own name, he is personally liable to the third party. But if the third party comes to know the existence of the principal, he may hold either the agent or the principal or both of them liable.
5. Where the agent acts for a principal who cannot be sued:
ADVERTISEMENTS:
An agent is also presumed to incur personal liability where he contracts on behalf of a principal who, though disclosed, cannot be sued (Sec. 230). For example, where an agent acts for an ambassador or foreign sovereign, he is personally liable. Similarly, where promoters contract for a projected company, they are held personally liable for that, as the company, being non-existent at the time of the contract, cannot be sued.
6. Where the agent exceeds his authority:
When an agent acts in excess of his real as well as apparent authority, and in this way commits a breach of warranty of authority, he will be personally liable to the third party for the excess part, if it can be separated from authorised part, otherwise for the whole transaction (Sees. 227 and 228).
7. Where there is a trade usage or custom:
An agent also incurs personal liability where there is a trade usage or custom to that effect. For example, a jobber may hold a broker personally liable as per the custom of trade in a stock exchange.
8. Where agent’s authority is coupled with interest:
Where the contract with the third party relates to a subject-matter in which the agent has a special interest, agent is personally liable to the extent of his interest because he is really a principal for that interest.
It should be noticed that in second, third, fifth and sixth cases mentioned above, the third party can hold only the agent personally liable and not the principal.