Question

Which of the following statements are correct? Under the provisions of the Indian Contract Act, 1872, to employ an agent, the principal must be: - (i) An Indian citizen. (ii) A major according to the law to which he is subject. (iii) Of sound mind. (iv) A person.

• A. Only (i), (ii), and (iii)
• B. Only (ii), (iii), and (iv)
• C. Only (i), (iii), and (iv)
• D. Only (i) and (iii)

Hint:

The general rule of agency is: "What a person can do by himself, he can do through an agent."
Therefore, if a person is incompetent to contract directly (due to minority or unsoundness of mind), they cannot contract through an agent either.

Answer 1

The Correct Option is B

Step 1: Understanding the Question:
The question asks about the statutory qualifications required for a person to act as a "principal" and employ an "agent" under Indian contract law.

Step 2: Key Legal Principles and Approach:
The qualifications of a principal are set out in Section 183 of the Indian Contract Act, 1872, which resides in Chapter X (Agency).

Step 3: Detailed Explanation:

• Statutory Provision: Section 183 of the Indian Contract Act, 1872, states: "Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent."

• Analysis of the Statements:

• (i) An Indian citizen: Not required. A foreigner can also employ an agent in India to perform lawful business transactions.

• (ii) A major according to the law to which he is subject: Correct. A minor cannot employ an agent because a minor's agreement is void *ab initio*, and they cannot perform an act through an agent that they are incompetent to do themselves.

• (iii) Of sound mind: Correct. A person of unsound mind cannot employ an agent to make contracts.

• (iv) A person: Correct. To enter into a contract of agency, the employing entity must be a legal "person" (either a natural person or a juristic person, such as a registered company).

• Therefore, statements (ii), (iii), and (iv) are correct.

• This corresponds to Option (B).

Step 4: Final Answer:
According to Section 183, a principal must be a person of majority and of sound mind, making Option (B) the correct answer.