Section 216 The Indian Contract Act, 1872
Section 216 – The Indian Contract Act, 1872
"Principal's right to benefit gained by agent dealing on his own account in business of agency."
Bare Act Language:
“If an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him.”
✅ Explanation:
Section 216 protects the principal when the agent secretly acts for his own benefit in a transaction related to the agency.
The principal can:
Repudiate (cancel) the transaction if:
The agent concealed any material fact, or
The agent’s dealing caused loss or was disadvantageous to the principal.
Claim any profit the agent made from such a deal, if the agent acted without consent.
📌 Example:
A appoints B to buy a piece of land for him.
B, instead of buying the land for A, buys it in his own name without informing A.
Later, A finds out and the land's value has increased.
➡ Under Section 216, A can either:
Cancel the deal, or
Claim the benefit/profit from B, since B acted without consent and used A's business opportunity.
🔗 Related Section:
Section 215 – Agent's duty to disclose all material facts when dealing on own account.
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