Section 238 The Indian Contract Act, 1872
Section 238 – The Indian Contract Act, 1872
Title: Effects of termination of agency
📜 Bare Act Language:
"The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, and so far as regards third persons, before it becomes known to them."
🔍 Explanation:
Section 238 deals with when the termination of an agent’s authority becomes effective:
The termination is not effective against the agent until the agent knows about it.
The termination is not effective against third parties until they know about it.
This protects agents and third parties who continue to act in good faith without knowledge of the termination.
🧠 Key Points:
Protects agent from liability for acts done before they know authority is revoked.
Protects third parties who deal with the agent without knowing about termination.
Principal remains liable for agent’s acts done before knowledge of termination.
⚖️ Example:
If A terminates B’s agency but B is unaware, and B contracts with C who also doesn’t know the termination, A is still bound by B’s contract with C.
RELATED Blog
0 comments