Section 224 The Indian Contract Act, 1872
📜 Section 224 – The Indian Contract Act, 1872
Compensation to agent for injury caused by principal's neglect
"Where one person employs another to do an act, and the agent does the act in good faith, the employer is liable to indemnify the agent against the consequences of that act, though it causes an injury to the rights of third persons."
✅ Explanation:
This section provides protection to an agent who, acting in good faith and under the directions of the principal, causes harm or injury to a third party. In such a case, the principal must compensate (indemnify) the agent.
🧠 Key Condition:
The agent must act in good faith—i.e., without knowledge that the act is wrongful or illegal.
The act must be within the scope of the agent’s authority.
The injury or legal consequence must result from the principal’s directions, not the agent’s own misconduct.
🧾 Example:
A, a principal, instructs B, his agent, to take possession of certain goods. B does so, believing A has the right. Later, it turns out the goods belonged to someone else, and B is sued.
➡️ Since B acted in good faith under A’s instruction, A must indemnify B for the damages or losses he suffers.
🔍 Key Points Summary:
| Element | Explanation |
|---|---|
| Who is protected? | The agent |
| When? | When acting under the principal’s instructions in good faith |
| Who pays for the damage? | The principal |
| Type of damage? | Injury or loss caused to third parties due to the agent’s act |
⚖️ Legal Principle:
This section embodies a basic rule of fairness — an agent shouldn’t suffer for faithfully executing a principal’s instructions unless the agent acted in bad faith or beyond authority.
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