Section 220 The Indian Contract Act, 1872
Section 220 of the Indian Contract Act, 1872 deals with the agent's liability for misconduct.
🔹 Section 220 – Agent’s duty to pay compensation for injury caused to principal by his negligence
An agent is liable to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill, or misconduct in the agency.
🔍 Explanation:
This section establishes that:
If an agent, while acting on behalf of the principal, causes loss or injury due to:
Negligence,
Lack of required skill, or
Misconduct (wrongful or dishonest behavior),
👉 then the agent must compensate the principal for the direct loss resulting from it.
🧑⚖️ Illustration:
A (principal) appoints B (agent) to purchase goods.
B carelessly buys defective goods or at a higher price than the market rate.
A suffers financial loss.
👉 B must compensate A for that loss.
📌 Key Points:
The agent is expected to act with reasonable care, skill, and honesty.
The agent is not liable for losses due to events beyond control, but is liable for direct losses due to his own fault.
Even if the agent works gratuitously, if there is negligence or misconduct, liability under this section still arises.
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