Chapter X - Agency
Section 187
Section 187: How authority is expressed or inferred
Express authority comes from words; implied authority is inferred from the circumstances, including ordinary dealing.
On this page
Need advice on Section 187?
This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.
Illustration
A owns a shop in Serampore, living himself in Calcutta, and visiting the shop occasionally. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purposes of the shop, and of paying for them out of A’s funds with A’s knowledge. B has an implied authority from A to order goods from C in the name of A for the purposes of the shop.
Rule and business relevance
Spoken or written communications can expressly authorise acts. Conduct and the usual course of business may establish implied authority, as illustrated by a shop manager’s known purchasing practice.
Limits and related provisions
A course of dealing must actually support the asserted authority. Mere job title or isolated conduct should not be treated as conclusive in every transaction.
Hypothetical business example
Hypothetical example: A proprietor knows that a manager regularly orders shop stock in the proprietor’s name and pays from business funds. Those circumstances may support implied purchasing authority.
Practical decision flow
Collect the relevant spoken or written instructions.
Review the ordinary course of dealing and the principal’s knowledge.
Define the act for which authority is asserted.
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
Do
- Collect the relevant spoken or written instructions.
- Review the ordinary course of dealing and the principal’s knowledge.
- Define the act for which authority is asserted.
Avoid
- A course of dealing must actually support the asserted authority. Mere job title or isolated conduct should not be treated as conclusive in every transaction.
Glossary
- Course of dealing
- The ordinary pattern of transactions relevant to inferring authority.
- Express words
- Spoken or written language granting authority.
Frequently asked questions
Can authority be given orally?
Yes. Express authority includes spoken words.
Can a regular known business practice matter?
Yes. The statutory illustration uses that kind of practice.
Does every employee automatically have buying authority?
No. The circumstances and scope need to support it.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026