Chapter X - Agency
Section 202
Section 202: Agency coupled with an interest
An agent’s own interest in the agency property can restrict termination that would prejudice that interest.
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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
Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.
Illustrations
(a) A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.
(b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price, the amount of his own advances. A cannot revoke this authority, nor is it terminated by his insanity or death.
Rule and business relevance
In the absence of an express contract, an agency coupled with the described interest cannot be terminated to its prejudice. The illustrations involve sale proceeds paying the agent’s existing debt or advances.
Limits and related provisions
Do not assume every expectation of commission is the required interest in the subject property. Identify the actual interest and the extent of prejudice.
Hypothetical business example
Hypothetical example: An agent advances money against goods and is authorised to sell them and repay the advance from proceeds. The principal cannot treat the authority as freely revocable to defeat that interest.
Practical decision flow
Identify the agent’s interest in the subject property.
Read any express contract governing termination.
Assess whether the proposed ending prejudices that interest.
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
- Identify the agent’s interest in the subject property.
- Read any express contract governing termination.
- Assess whether the proposed ending prejudices that interest.
Avoid
- Do not assume every expectation of commission is the required interest in the subject property. Identify the actual interest and the extent of prejudice.
Glossary
- Interest in subject matter
- The agent’s own interest in the property forming the agency’s subject matter.
- Prejudice
- Harm to that protected interest through termination.
Frequently asked questions
Does the rule protect every commission expectation automatically?
The section requires an interest in the property; its existence must be established.
Can death end the authority in the statutory examples?
The examples state that the described protected authority is not ended by death or insanity.
Is the express contract relevant?
Yes. The provision is framed in its absence.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026