Chapter X - Agency
Section 216
Section 216: Benefits from secret self-dealing
A principal may claim benefits from an agent’s secret personal dealing in the agency business.
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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
If an agent, without the knowledge of his principal, deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction.
Illustration
A directs B, his agent, to buy a certain house for him. B tells A it cannot be bought, and buys the house for himself. A may, on discovering that B has bought the house, compel him to sell it to A at the price he gave for it.
Rule and business relevance
The rule applies where, without the principal’s knowledge, the agent deals on personal rather than the principal’s account. The principal can claim any resulting benefit from the agent.
Limits and related provisions
Identify the agency opportunity and actual resulting benefit. This right is distinct from the repudiation analysis under section 215.
Hypothetical business example
Hypothetical example: An agent instructed to buy a house falsely says it cannot be bought and instead purchases it personally. The illustration allows the principal to claim the benefit of that purchase.
Practical decision flow
Identify the transaction within the agency business.
Establish personal dealing without the principal’s knowledge.
Trace the benefit resulting to the agent.
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 transaction within the agency business.
- Establish personal dealing without the principal’s knowledge.
- Trace the benefit resulting to the agent.
Avoid
- Identify the agency opportunity and actual resulting benefit. This right is distinct from the repudiation analysis under section 215.
Glossary
- Secret benefit
- The gain from the undisclosed personal transaction.
- Agency opportunity
- The transaction or business the agent was entrusted to pursue for the principal.
Frequently asked questions
Must the principal have been unaware?
The statutory setting is dealing without the principal’s knowledge.
What can be claimed?
The benefit that resulted to the agent from that transaction.
Is this exactly the same as repudiation?
No. Section 215 separately addresses repudiation conditions.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026