Section 208 The Indian Contract Act, 1872
Section 208 – The Indian Contract Act, 1872
Title: When termination of agent’s authority takes effect as to agent, and as to third persons
📜 Bare Act Language:
"The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, and so far as regards third persons, before it becomes known to them."
🔍 Explanation:
Section 208 explains when the termination of an agent’s authority becomes legally effective:
For the agent: Termination is valid only when the agent knows about it.
For third parties (outsiders dealing with the agent): Termination is effective only when they become aware of it.
This ensures that neither the agent nor third parties are unfairly penalized for actions taken in good faith without knowing that the agency has ended.
🧠 Key Points:
Protects the agent from liability for actions taken without knowledge of termination.
Protects third parties who continue dealings with the agent unaware of the termination.
The principal is still bound by the agent’s acts done in ignorance of the termination.
⚖️ Example:
A appoints B as agent to buy goods. A revokes B’s authority but B doesn’t know this.
B buys goods from C, who also doesn’t know of the termination.
→ The purchase is binding on A, because neither B nor C knew of the termination.
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