Section 176 The Indian Contract Act, 1872
Section 176 – The Indian Contract Act, 1872
Title: Contract of agency not to be affected by death or insanity of principal, where notice not given
🔹 Bare Act Language:
Section 176 – "Where the principal dies or becomes of unsound mind, the authority of the agent continues until the agent has notice of the death or insanity."
🔍 Explanation:
If a principal dies or becomes insane, the agent’s authority does not automatically terminate immediately.
The agent’s authority continues until the agent receives actual notice of the principal’s death or insanity.
This protects third parties who deal with the agent in good faith, unaware of the principal’s condition.
🔹 Illustration:
A appoints B as his agent.
A dies but B does not receive the news immediately.
B continues to act on A’s behalf.
The acts done by B before receiving notice of A’s death are valid and binding on A’s estate.
🧠 Important Points:
Protects third parties who deal with agents in good faith.
Requires actual knowledge or notice to the agent for termination of authority.
Similar principle applies if principal becomes mentally unsound.
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