9.7 Personal liability of agents

Where the agent acts for a foreign principal: When an agent contracts for the sale or purchase of goods for the principal residing abroad, the agent is personally liable for such contracts. However, the agent can exclude his personal liability by expressly providing in the contract not to incur personal liability.
Where the agent acts for an undisclosed principal: Where the agent acts for an undisclosed principal, he is personally liable on the contracts. But where the agent discloses that he is only an agent or the third party knows that he is acting as an agent of another, then the agent is not personally liable.
Where the agent acts for an incompetent principal: When the agent contracts for a principal who is not competent to contract such as minors, persons of unsound mind etc., the agent is personally liable on the contracts.
Where the Agent Acts for a Non-existing Principal: Where the agent acts for a principal who is non-existent, the agent is personally liable on the contracts. For instance, the promoters, contracting on behalf of the company, which is yet to be incorporated, are personally liable.
Where the agent’s authority is coupled with interest: Where an agent has an interest in the subject-matter of the contract, his agency is said to be coupled with interest. In such a case, the agent is personally liable to the extent of his interest in the contract. He can also enforce the contract to the extent of his own interest.
Where an agent receives or pays money by mistake or fraud: Where an agent receives some money from a third party by mistake or fraud, he is personally liable to the third person for the refund of such money. Likewise, if he pays some money to a third party by mistake or fraud, he can recover it back from the person to whom it has been paid.
Where the contract expressly provides: If at the time of entering into a contract with a third party, it is expressly agreed that the agent shall be personally liable for the contract, the agent incurs personal liability.
Where the agent signs the negotiable instruments in his own name: If an agent signs the negotiable instruments such as Promissory Note, Bill of Exchange or Cheque, without disclosing that he signs as agent, he incurs personal liability on the instrument.