LS Case Lawyer Revocation of Authority – The Legal Lock

Revocation of Authority – The Legal Lock

Revocation of authority (sec 201-210 ICA)

Introduction:-

Chapter X of the section (182-238) of the Indian contract act deals with the topic of ‘agency’. Revocation of a contract is a fundamental means to end the contract. The burden of proof rests on the affirming party to prove to a contract is ended as well as it can be either the principal or the agent. The sense of responsibility of an agent comes to an end once the contract has been terminated or if the contract was drawn in such a technique that it was time limited. The contract of agency under the Indian Contract Act, 1872 is implicit as ‘a contract in which a party employs another party to do any act for himself or else to correspond to him dealing with a third person’. In this article we discussed about the section (201-210).

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Section 201:- Termination of agency

An agency or authority harmony is a form of general contract. Per se, apart from where the agency is irreversible, an agency or authority is able to come to an end in the same manner as a contract is discharged. Solitary the take action or consent of the parties to the agency or the enforcement of the law may end the connection between the principal and the agent or authority.

In this section:-

  • An agency is terminated by the principal revoking his authority,
  • By the agent renouncing the business of the agency;
  • By the business of the agency being completed;
  • 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

This termination also held in some ways:-

  • By the act of the parties-
  • By operation of law-

1) by the act of the parties –


i) By agreement The Contract of Agency can be concluded at any moment in time by mutual agreement between the principal and agent.

ii) By revocation of the principalThe power of an agency be able to be rescinded at any time by the principal. This happens at any time which provides a satisfactory note period is given and it is done in a logical and rational manner by the principal.
iii) By Renunciation of an agentRenunciation which means diminishing from liability as an agent. Similar to Principal, Agent can also give up to the agency. Section 206 of the Indian Contract Act says that the agent must give his Principal a rational notice of rejection. Or else, he will be legally responsible to make good for the damage caused to the principal for notice

By operation of law –

By the completion of the agency – the Agency can turn out to be to an end followed by the completion of the task for which the agency or authority is created.

By the expiry of time – it can also be ended by the expiry of time. If the agency is created for the specific period after that it is ended later than expiry of the time.
v) Destruction of the subject matter – in this ground if this subject matter of the agency is destroyed then the created agency comes to the end.

Example – An agency is created for the sale of a car if the car catches fire before the sale of the agency comes to an end. In this example of the contract, the car plays the role of subject matter.
Principal becoming an alien enemyIf the Principal becomes an alien enemy then also the contract of the agency comes to end.

Dissolution of companies or firmsA Firm or corporation may be observed as a Principal in this contract of the Agency. If the corporation or firm is dissolved then also the agency comes to an end of the contract.

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Section 202:-termination of agency, where the agent has an interest in the subject matter

This section contains:-

  • Where the agent has himself an interest in the property which forms the subject matter of the agency
  • The agency can not ,
  • In the absence of an express contract,
  • Be terminated to the prejudice of such interest.

Illustration:-
P gives authority to Q to sell P’s house and to pay himself, further than this proceeds, the debts due to him from P. P cannot revoke this authority, nor can it be ended by his insanity or death.

Section 203:- when the principal may revoke the agent’s authority

This section says that-

  • The principal may,
  • Save as otherwise provided by the last preceding section (202)
  • Revoke the authority to his agent
  • At any time before
  • The authority has been exercised

So as to bind the principal section 203 cannot override on section 202

Section 204:- revocation where authority has been partially exercised

This section discussed about-

  • The principal cannot revoke the authority
  • Given to his agent,
  • After the authority has been partially exercised
  • So far as regards such acts and obligations as arise
  • For acts already done in the agency

Illustrations

(a) P authorizes Q to buy 700 bags of yarn on account of p and to pay for it out of p’s moneys remaining in q’s hands. B buys 700 bags of yarn in his own name, so as to make him personally legally responsible for the price. P cannot revoke Q’s authority so far as regards payment for the yarn.

Section 205:- Compensation for revocation by principal, or renunciation by an agent.

This section contains-

  • 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.
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Section 206:- Notice of revocation or renunciation.

This section of the contract act says that rational notice must be given of such revocation, or else the damage in this manner ensuing to the principal or the agent then that, at the same time as the case may be, must be through good to the one by the other.

SECTION 207:- Revocation and Renunciation may be expressed or implied.

Section 207 deals with revocation and renunciation may be expressed or it may be implied in the performance of the principal or agent in that order.

Illustration-
P allows Q to let P’s residence. Subsequent to P gave permission it himself. This is called as an implied revocation of Q’s authority.

Section 208:- when termination of agent’s authority takes effect as to agent, and as to third persons.

This section means to:-

  • The termination of the authority of an agent does not, so far as regards the agent,
  • Take effect before it becomes known to him, or,
  • So far as regards third persons, before it became known to them

Illustrations-
P directs Q to sell goods for him, and agrees to give Q ten percent commission on the price obtained by the goods. P afterwards by notice revokes Q’s power. Q after the notice was sent, other than before he received it sold the goods for 300 rupees. In conclusion, this sale is binding on P, and Q is permitted to ten percent as his commission.

R, at Madhya Pradesh, by notice directs S to sell for him some rice lying in a warehouse in Haryana and thereafter through notice revokes, his authority directs S to sell the rice and directs S to send the rice to Madhya Pradesh. S later than getting the second notice, entered into a contract with T, who knew the first notice, but not the second notice, for the sale to him of the rice. T pays S the money, with which S leave suddenly. T’s payment is good as against R.

M directs N, his agent, to pay definite money to O. M dies, and P takes out probate to his will. N, after M’s death, but prior to hearing of it, pays the money to O. The payment is good as against P, the perpetrator.

Section 209:- Agent’s duty on termination o agency by principal’s death or insanity.

This section discusses that, when an agency is ended by the principal dying or fitting in an unsound mind category, the agent is bound to obtain, on behalf of the representatives of his late principal, the entire rational steps used for the fortification and safeguarding of the interests recommended to him.

Section 210:- Termination of Sub-agent’s authority.

This section of the topic agency talks about, the termination of the authority of an agent grounds the extinction (issue to the rules in this limited on the subject of the termination of an agent’s authority) of the authority of all sub-agents selected by him .

Some case law :-

In this case of Air India Ltd. vs. GATI Ltd., 2015, it was held that in case of repudiator breach of contract by one party, the annihilation of the contract by the other party is acceptable yet if the method is not followed. Functioning or impediment on the side of the one party is able to create the process agreed for termination surplus to requirements as no-adherence of the procedure may not go through the party which committed breach due to their actions.

In this second case law, Deva Builders through MR Rattan vs. Nathpa Jhakri Joint Venture, 2002 the Court held that “even though the Defendant has not given the obligatory notice to end the contract although it was the Plaintiff who had committed breach of the contract by not implementing the task in harmony with the terms and conditions of the agreement.”

Conclusion:-

Revocation of the author or agency contains sections 201 to 210 in the Indian contract act. So, according to this topic, it can be accomplished that the agency contract is an out of the ordinary worth of the law of contract. It says that it may be terminated in a multiplicity of ways with a mixture of reasons to it as well and it shows the relationship between the principal and the agent. The trust bond is important between the parties because if there is no trust then the company cannot take place and the agency is terminated.

References:

https://www.srdlawnotes.com/2018/06/termination-of-agency-contract-of-agency.html?m=1

https://www.mondaq.com/india/contracts-and-commercial-law/674534/intricacies-involving-termination-of-a-contract-without-adhering-with-the-due-procedure


Madhvi Patidar Madhvi Patidar