Section 186: Express and implied authority

Rule and business relevance

Authority can be stated directly or inferred from relevant circumstances, as explained in section 187. Businesses should examine both written appointments and their established dealings.

Limits and related provisions

Do not infer unlimited authority merely because some implied authority exists. Identify the particular act and the basis for its authorisation.

Hypothetical business example

Hypothetical example: A manager has a written purchasing limit while ordinary dealings may establish authority for routine shop orders. Each transaction must be tested against the relevant authority.

Practical decision flow

Identify any spoken or written authority.

Review circumstances supporting implied authority.

Match the particular act to the scope established.

• India Code: Contract Act, section 186

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

Express authority

Authority given by spoken or written words.

Implied authority

Authority inferred from the relevant circumstances.

Frequently asked questions