Section 212 The Indian Contract Act, 1872
Section 212 of the Indian Contract Act, 1872 deals with the duties of a principal to an agent, especially regarding remuneration and liability for neglect or want of skill.
🔹 Section 212 – Agent’s duty in conducting principal’s business
"An agent is bound to conduct the business of his principal according to the directions given by the principal, or, in the absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and, if any profit accrues, he must account for it."
🔍 Explanation:
This section places two main duties on the agent:
Follow the principal’s instructions:
The agent must strictly act according to the principal’s directions.
If no directions are given, he should follow local business customs.
Liability for acting otherwise:
If the agent deviates from instructions or custom and a loss occurs, he must compensate the principal.
If a profit results, he must hand it over to the principal, not keep it.
📌 Example:
A instructs his agent B to buy goods only from X.
B buys from Y instead, where prices are higher.
If A suffers a loss, B must compensate for that loss.
If B makes a profit from the deal, he must hand it over to A.
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