Termination of Agency: Indian Contract Act, 1872
Can an agency relationship be terminated without notice?
In some situations, termination may happen suddenly, such as through mutual agreement or immediate revocation by the principal. However, if terminating without notice would unfairly harm the agent, like in cases of irrevocable agency, the law might require giving reasonable notice.
What happens if the principal dies before revoking the agency?
The agency automatically ends upon the principal’s death. The agent loses their authority, and any pending tasks usually come to a halt. Yet, if the principal’s estate appoints a new representative, a new agency might form.
Is it possible to revive a terminated agency?
Yes, parties can revive the agency by agreeing to a new agency relationship. They should address any previous terms or conditions in the new agreement.
Does termination of agency affect prior obligations or liabilities?
Generally, termination doesn’t erase prior obligations or liabilities incurred in good faith. Both parties remain responsible for fulfilling existing contractual duties.
Can an agent sue for damages if the agency is wrongfully terminated?
Yes, if the agent suffers losses due to wrongful termination, they may seek compensation from the principal. However, they must prove the termination was wrongful and demonstrate their incurred damages.
Termination of Agency : Indian Contract Act, 1872
The Indian Contract Act 1872 regulates contracts and agency relationships in India. An agency is a situation where one person, called an agent, acts for another person, known as the principal, with the latter’s permission. Termination of the agency is when this arrangement ends. It can happen in two ways: either the parties decide to end it themselves or certain events or laws require it to stop. So, termination of the agency is simply when the agent stops acting on behalf of the principal, either because they both agreed to stop or because certain events or laws make them stop.
Geeky Takeaways:
- Termination of agency under the Indian Contract Act can occur through mutual agreement, revocation by the principal, or voluntary renunciation by the agent.
- Agency relationships can also terminate automatically under specific circumstances, such as completing the agency’s purpose, expiration of a specified time, or the death or insolvency of the principal.
- The timing of termination varies, with immediate effect for mutual agreement, upon notification for revocation, and after reasonable notice for renunciation by the agent.
- Irrevocable agency may arise in situations involving an interest vested in the agent, potential personal loss upon revocation, or partial exercise of authority by the agent.
Table of Content
- Termination of Agency under Indian Contract Act, 1872
- Termination of Agency by Act of the Parties
- Termination of Agency by Operation of Law
- When Termination of Agency Takes Effect?
- Irrevocable Agency under Indian Contract Act
- Conclusion
- Termination of Agency: Indian Contract Act, 1872- FAQs