Section 202 The Indian Contract Act, 1872
Section 202 – The Indian Contract Act, 1872
📘 Title: Termination of agency, where agent has an interest in subject-matter
🔹 Bare Act Language:
"Where the agent has himself 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 a principal can revoke an agent's authority at any time before it's exercised (as per Section 203).
However, if the agent has a personal interest in the subject-matter of the agency, then the principal cannot revoke the agency to the detriment of that interest, unless there's a contract that says otherwise.
✅ Example:
A gives authority to B to sell A’s house and pay himself a loan of ₹1 lakh from the sale proceeds.
Here, B (agent) has an interest in the property (repayment of ₹1 lakh).
A cannot revoke this authority without B’s consent, as it would prejudice B’s interest.
📌 Key Points:
Applies when the agent has a beneficial interest in the subject matter.
Such agency is called an “agency coupled with interest.”
It cannot be revoked, even by:
Principal's death
Insanity
Insolvency
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