Section

If he buys something whose defect he knows, it becomes binding upon him if his principal is not satisfied. But if he was unaware of it, he may return it …

His statement, “If he buys”: the subject here is the agent.

His statement, “something whose defect he knows, it becomes binding upon him if his principal is not satisfied”: This is because the principal only appointed him to purchase something sound, not to purchase something defective. Everyone knows that no one would say, “Buy me something defective.”

For example, he appoints him to buy a car, and he purchases a defective car at the market price, with neither an increase nor a decrease. We say: You, the agent, must bear it, and you must reimburse the principal for the money he gave you. But if the principal is satisfied—for instance, if he says, “This man has treated me kindly and has gone to the trouble of obtaining the car, and I am satisfied even though it has a defect”—then we say: It is valid, and the agent bears no liability, because the right belongs to the principal and he has waived it.

However, there remains the question: if we say that this defective item is binding upon the agent, and that the principal is entitled only to a sound item, does the agent have the right to return the merchandise to the person from whom he bought it?

The answer is: he does not have that right, because the author says, “If he buys something whose defect he knows.” The agent is now aware of the defect and entered into the transaction knowingly, so he has no right to return it. An exception is made, however, with regard to the right of return: if the agent says, “I am buying it on behalf of so-and-so as his agent, and I accept the defect; but if my principal is not satisfied, then he has the option,” we say that he may return it. This is because the seller entered into the transaction knowingly and accepted this condition.

His statement, “But if he was unaware of it, he may return it”: the subject refers back to the agent; that is, if