Section 142

Section 142 of the Indian Contract Act, 1872, deals with the concept of 'agency by holding out.' It states that 'a person who holds out another as his agent, has thereby authority to bind him to the same extent as if he had actually authorized him to act for him.' This means that if a person represents another as his agent, or knowingly permits another to hold himself out as his agent, he is bound by the acts of that agent, even if he did not actually authorize him to act on his behalf. The section emphasizes the importance of outward appearances and the principle that a person who holds out another as his agent must accept the consequences of that representation. The courts have interpreted this section to mean that a person who holds out another as his agent must have done so in such a way that a third party would reasonably believe that the person held out was, in fact, his agent. For example, if a person allows another to sign documents on his behalf, or represents him as his agent in business dealings, he may be bound by the acts of that agent, even if he did not actually authorize him to act.