The agent can be personally liable on a contract in the following special circumstances
- Where the agent has contract personally
When entering into the contract, the agent has failed to make it clear that he is contracting as an agent. The status of the agency has not been mentioned to the third party who has been led to believe that the agent was contracting with him on his own behalf and not as an agent
- Personal liability of agent when he contracts on behalf of a non-existent principal
A good example of such a situation is where persons who are in the process of incorporating a company enter into contract in connection with the company’s establishment. Such persons are called ‘promoters’ of the company and they can incur personal liability because the company (the principal) is not in existence at the time of the contract.
- Agent signing bill of exchange or cheque
Where an agent’s name appears on any bill of exchange, promissory note or cheque, the agent will be personally liable unless he makes it clear that he is acting in a representative capacity.