Section 185: Agency without consideration

Rule and business relevance

The absence of a payment or other consideration does not, by itself, prevent creation of the agency. An unpaid appointment may therefore still have agency consequences.

Limits and related provisions

This does not prove that authority was actually granted or remove formal requirements imposed by other laws for particular acts.

Hypothetical business example

Hypothetical example: A business owner authorises a trusted person, without a fee, to place a defined order on the owner’s behalf. Lack of a fee alone does not negate agency.

Practical decision flow

Identify evidence of the appointment.

Define the permitted acts and limits.

Check any special formal requirements for the transaction.

• India Code: Contract Act, section 185

Check the applicable legal framework

This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.

Practical checklist

Glossary

Consideration

The supporting act or promise ordinarily relevant to contract formation.

Gratuitous agency

An agency appointment without consideration or remuneration in the relevant arrangement.

Frequently asked questions