Contract of Agency
A relationship where one person (agent) is employed to act on behalf of another (principal) in dealings with third parties.
Detailed Meaning
Under the Indian Contract Act, 1872 (Chapter X), any person competent to contract may act through an agent to bind them to a third party. Unlike an ordinary contract, no consideration is necessary to create an agency (Section 185) — the agent's undertaking to act is itself sufficient. An agent need not personally be competent to contract (a minor may act as agent), though the principal bears the risk of the agent's incapacity, since the principal alone becomes liable to the third party on the agent's authorised acts. An agency may be created expressly, impliedly from the conduct or relationship of the parties, by subsequent ratification of an unauthorised act, or by necessity (e.g. a carrier of perishable goods acting to preserve them). The agent's authority — express or implied by the circumstances — defines the limits within which the principal is bound; an act beyond that authority does not bind the principal unless ratified.
Authoritative Sources & Provenance
Relevant Legislation
- The Indian Contract Act, 1872
General legal information for reference only, reviewed for accuracy but not a substitute for advice from a qualified advocate on your specific facts.