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Chapter X - Agency

Section 204

Section 204: Revocation after partial exercise

Partial exercise of authority protects acts and obligations arising from what has already been done in the agency.

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Need advice on Section 204?

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.

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Statutory text

Bare law

The principal cannot revoke the authority given to his agent after the authority has been partly exercised, so far as regards such acts and obligations as arise from acts already done in the agency.

Illustrations

(a)A authorizes B to buy 1,000 bales of cotton on account of A, and to pay for it out of A’s moneys remaining in B’s hands. B buys 1,000 bales of cotton in his own name, so as to make himself personally liable for the price. A cannot revoke B’s authority so far as regards payment for the cotton.

(b) A authorizes B to buy 1,000 bales of cotton on account of A, and to pay for it out of A’s moneys remaining in B’s hands. B buys 1,000 bales of cotton in A’s name, and so as not to render himself personally liable for the price. A can revoke B’s authority to pay for the cotton.

Rule and business relevance

The principal cannot revoke authority to the extent stated after it has been partly exercised. The illustrations distinguish an agent who has incurred personal purchase liability from one who has bought directly in the principal’s name.

Limits and related provisions

Do not treat any minor activity as making the whole appointment permanently irrevocable. Identify the existing acts and resulting obligations precisely.

Hypothetical business example

Hypothetical example: An authorised buyer has purchased in the buyer’s own name and become personally liable. The principal cannot revoke the payment authority in the way prohibited by the first illustration.

Practical decision flow

Establish what the agent has already done.

Identify obligations arising from those acts.

Separate protected existing commitments from unused future authority.

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

  • Establish what the agent has already done.
  • Identify obligations arising from those acts.
  • Separate protected existing commitments from unused future authority.

Avoid

  • Do not treat any minor activity as making the whole appointment permanently irrevocable. Identify the existing acts and resulting obligations precisely.

Glossary

Partial exercise
Use of part of the authority before attempted revocation.
Accrued obligation
An obligation arising from acts already done in the agency.

Frequently asked questions

Does partial exercise always freeze every future power?

No. The restriction concerns the stated acts and obligations arising from acts already done.

Can personal liability of the agent matter?

Yes. The contrasting cotton-purchase illustrations make it important.

What documents are most useful?

The order, contracting name, payment terms and evidence of commitments already made.

Need help applying this provision to your situation?

Contact Bizeneed

Last updated 10 October 2026