A conceptual note on the modes of termination of agency - Indian Contract Act, 1872

Topics: Contract, Agency, Agent Pages: 14 (2816 words) Published: September 8, 2014


CHAPTER 1: Introduction
1.1 Research Problem
1.2 Literature Review
1.3 Scope and Objectives
1.4 Research Questions
1.5 Research Methodology

CHAPTER 2: Modes of termination of agency: A Synopsis
CHAPTER 3: Effects of termination of agency: A Discussion
CHAPTER 4: Duty of agent on termination of agency
CHAPTER 5: Conclusion

‘’Agent’’ and ‘’principal’’ are defined in Section 182 of the Indian Contract Act, 1872 in the following words: 182."Agent" and "principal" defined.-An "agent" is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the "principal". The expression agency is used to connote the relation which exists where one person has an authority or capacity to create legal relations between a person occupying the position of principal and third parties.1 Section 201 talks about the ways in which the relationship of principal and agent may end. 201. Termination of agency.-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. The section provides for the following modes of termination: 1. Revocation;

2. Renunciation by agents;
3. Completion of business;
4. Principal or agent’s death;
5. Principal or agent becoming person of unsound mind;
6. Insolvency of principal;
7. Expiry of time.
According to Section 203 of The Indian Contract Act, 1872, the principal may revoke his agency’s authority and thus put an end to the agency. However, principal cannot revoke an agency coupled with interest to the prejudice of such interest. Such agency is coupled with interest. An agency is coupled with interest when the agent himself has an interest in the subject-matter of the agency. As per Section 207 of The Indian Contract Act. 1872, the revocation or renunciation of an agency may be made expressly or impliedly by conduct. The termination does not take effect as regards the agent, till it becomes known to him and as regards third party, till the termination is known to them (Section 208 of The Indian Contract Act. 1872). However, revocation is subject to the following conditions:

1) Revocation operates prospectively which is stated in Section 204 204. Revocation where authority has been partly exercised.-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. 2) In accordance with 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.” 3) Liability to compensate which is stated in the Sections 205-206. 205. Compensation for revocation by principal, or renunciation by agent.-Where there is an express or implied contract that the agency should be continued for any period of time, the principal must make compensation to the agent, or the agent to the principal, as the case may be, for any previous revocation or renunciation of the agency without sufficient cause. An agency will come to an end when its business is completed as per Section 201. An agency is determined automatically on the death or insanity of the principal or the agent. Winding up of a company has the same effect. Acts done by the agent before death would remain binding.2 Where an attorney appointed a counsel for his principal, it...

Bibliography: Books:
Bhadbhade Nilima, Pollock F. and Mulla D. F., Pollock and Mulla Indian Contract and Specific Relief Acts, 13th edition, 2010, LexisNexis ButterworthsWadhwa, Nagpur.
Bhadbhade Nilima, Pollock F. And Mulla D.F., Pollock and Mulla Indian Contract Act 1872, 14th Edition, 2012, Lexisnexis Butterworthswadhwa, Nagpur.
Bangia. R.K., contract-II, 9th edition, 2012, Allahabad Law Agency, Allahabad.
Singh Avtar, Contract and Specific Relief, 11th Edition, 2013, Eastern Book Company, Lucknow.
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