Section 162 The Indian Contract Act, 1872
Section 162 – Indian Contract Act, 1872
Title: Termination of agency, where agent has an interest in subject-matter
Bare Act Language:
Section 162.
Where the agent has an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.
🔍 Explanation:
This section creates an exception to the general rule that an agency can be terminated at the will of the principal.
If the agent has an interest in the subject-matter of the agency (e.g., a financial stake),
Then the principal cannot revoke the agency if doing so would harm the agent’s interest,
Unless there is an express contract allowing such revocation.
✅ Key Points:
This is called an agency coupled with interest.
Such agency is generally irrevocable unless otherwise agreed.
The interest must be in existence at the time of creation of the agency.
🧑⚖️ Example:
A owes B ₹10,000 and appoints B as his agent to sell A’s house, allowing B to repay himself from the sale proceeds.
➡️ This is an agency coupled with interest.
➡️ A cannot revoke B’s authority to sell the house to the prejudice of B’s interest in recovering his ₹10,000.
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