Contract of Agency

Hi,

Your query is regarding Revocation of Authority under the Indian Contract Act.

Section 201 of the Indian Contract Act talks about Revocation of Authority which states that an agency is terminated by the principal revoking his authority, or by the agent renouncing the business of the agency or by the business of the agency being completed or by either the principal or agent dying or becoming of unsound mind, or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors.

Note: This section is not exhaustive. An agency may also be terminated by mutual agreement, completion of the term of agency, the agency becoming subsequently unlawful, etc.

Section 203 says that the principal may revoke his authority only before the agent exercises such authority.

Under Section 204 The principal cannot revoke the authority given to his agent after the authority has been partly exercised, so far as regards such acts and obligations as arise from acts already done in the agency.

As mentioned in section 206, reasonable notice must be given of such revocation or renunciation, otherwise, the damage thereby resulting to the principal or the agent, as the case may be, must be made good to the one by the other.

The revocation may either be express or implied according to Section 207. However, according to Section 208, The revocation becomes effective only when it comes to the knowledge of the agent or the third person respectively.

Hope this solves your query

Regards,

Archit

Hey,

Firstly, what is an agency contract? When one party delegates some authority to another party whereby the latter performs his actions in a more or less independent fashion, on behalf of the first party, the relationship between them is called an agency. Agency can be express or implied. Chapter X of the Indian Contract Act, 1872 deals with the laws relating to Agency. 

Termination of Agency contract: An agent’s authority can be terminated at any time.

Agency can be terminated by the following ways:

1. On the basis that agency relationship is created by agreement between the principal and the agent, such a relationship can also be brought to an end by mutual agreement between the parties, either in writing or orally.
2. If the agreement between the agent and principal stipulates a time  period after which the agreement might come to an end, then in that case the agency contract ends according to the agreement.
3. If the agreement provides for the agency to terminate upon the occurrence of a specified event, the agency will come to an end upon the happening of the specified event.
4. If an agent is appointed to accomplish a particular task or for a specific purpose, when the task is accomplished by the agent or the specific purpose is attained, the agency will terminate.
5. The authority of an agent may be revoked at any time by the principal. However unilateral revocation otherwise than in accordance with the provisions of the agency agreement may render the principal liable to the agent for the breach of an agency agreement.

Hence to answer your question, principal might revoke the duties of the agent but then the former will be liable for the breach of contract if this revocation is not in accordance with the contract.

Hope this helps!

Regards

Palak Singh

You have rightly been guided by expert Palak Singh. I endorse the wise advice of him.

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