Misrepresentation made, or
frauds committed, by agents acting in the course of their business for their principals, have the same
effect on agreements made by such agents as if such misrepresentations or frauds had been made or
committed by the principals; but misrepresentations made, or frauds committed, by agents, in matters
which do not fall within their authority, do not affect their principals.
Illustrations
(a) A, being B’s agent for the sale of goods, induces C to buy them by a misrepresentation, which he was not authorized by
B to make. The contract is voidable, as between B and C, at the option of C.
(b) A, the captain of B’s ship, signs bills of lading without having received on board the goods mentioned therein. The bills
of lading are void as between B and the pretended cosignor.