Section 121 The Indian Contract Act, 1872
Section 121 – The Indian Contract Act, 1872
Title: Termination of agent’s authority
🔹 Bare Act Language:
Section 121 – "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 becomes known to them."
🔍 Explanation:
Section 121 explains when the termination of an agent's authority becomes effective:
For the agent:
The termination is not valid until the agent knows that his authority has been ended.
For third parties:
The termination is not valid as to third persons who dealt with the agent in good faith, until they know that the agent's authority has been terminated.
🔹 Illustration:
A appoints B as his agent.
Later, A revokes B’s authority but does not inform B or the public.
B continues to deal with C, a third party, in A’s name.
Since B was unaware, and C was also unaware, A may still be bound by B’s acts until both B and C know of the termination.
✅ Purpose of Section 121:
To protect the agent from liability if they act in ignorance of the termination.
To protect third parties who deal in good faith with an agent presumed to have authority.
To prevent unfair disadvantage due to non-communication of termination.
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