Section 209 The Indian Contract Act, 1872
📜 Section 209 – The Indian Contract Act, 1872
Revocation of authority by the principal – when it becomes effective
"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 209 addresses when the revocation of an agent’s authority becomes legally effective, both:
Toward the agent, and
Toward third parties (outsiders dealing with the agent).
👉 The two key rules:
For the agent: The termination (revocation) of his authority is effective only when the agent comes to know about it.
For third parties: The termination is effective only when the third party (e.g., customer, client) dealing with the agent has notice of the revocation.
🧾 Example:
A authorizes B to sell goods on his behalf. Later, A cancels B’s authority but does not inform him immediately.
If B, unaware of the revocation, sells goods to C, the sale is binding on A.
If C is also unaware of the revocation, the contract is valid, even though A had revoked B’s authority earlier.
🔍 Key Points:
| Aspect | When revocation is effective |
|---|---|
| Against the agent | When the agent becomes aware of it |
| Against third parties | When they receive notice of it |
⚖️ Legal Purpose:
Protects third parties and agents from being unfairly bound by revocations they had no knowledge of.
Encourages clear communication from principals to avoid liability.
🧭 Related Sections:
Section 201: Termination of agency
Section 202: Agency coupled with interest (cannot be revoked)
Section 208: Modes of termination
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