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Chapter X - Agency

Section 222

Section 222: Indemnity for lawful authorised acts

A principal must indemnify an agent for consequences of lawful acts performed within conferred authority.

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Need advice on Section 222?

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 employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him.

Illustrations

(a)B, at Singapur, under instructions from A of Calcutta, contracts with C to deliver certain goods to him. A does not send the goods to B, and C sues B for breach of contract. B informs A of the suit, and A authorizes him to defend the suit. B defends the suit, and is compelled to pay damages and costs, and incurs expenses. A is liable to B for such damages, costs and expenses.

(b)B, a broker at Calcutta, by the orders of A, a merchant there, contracts with C for the purchase of 10 casks of oil for A. Afterwards A refuses to receive the oil, and C sues B. B informs A, who repudiates the contract altogether. B defends, but unsuccessfully, and has to pay damages and costs and incurs expenses. A is liable to B for such damages, costs and expenses.

Rule and business relevance

The statutory illustrations cover damages, costs and expenses following authorised commercial contracts. Both lawfulness and authority are important conditions.

Limits and related provisions

Do not extend the rule automatically to unauthorised or criminal conduct. Sections 223 and 224 address further distinctions.

Hypothetical business example

Hypothetical example: A broker lawfully places an authorised purchase and becomes liable when the principal refuses to accept the goods. The resulting damages and costs are considered under the indemnity rule.

Practical decision flow

Establish the act and conferred authority.

Confirm the act was lawful.

Document the resulting liability, costs and expenses.

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 the act and conferred authority.
  • Confirm the act was lawful.
  • Document the resulting liability, costs and expenses.

Avoid

  • Do not extend the rule automatically to unauthorised or criminal conduct. Sections 223 and 224 address further distinctions.

Glossary

Indemnity
Protection against the consequences described in the provision.
Conferred authority
The authority actually given to the agent.

Frequently asked questions

Does this cover every act the agent chooses?

No. It concerns lawful acts in exercise of conferred authority.

Can litigation costs be relevant?

The illustrations include costs and expenses in the authorised transactions.

Does a promise cover criminal acts automatically?

No. Section 224 expressly addresses that exclusion.

Need help applying this provision to your situation?

Contact Bizeneed

Last updated 10 October 2026