Termination of Agency by Act of the Parties
1. Agreement: Termination of agency can occur through the actions of the parties involved. Firstly, termination by agreement happens when both the principal and the agent decide to end their relationship. This can be done verbally or in writing, where they mutually consent to terminate the agency. Such agreements are legally binding and bring the agency to an end.
2. Revocation by the Principal: Termination can result from the revocation of authority by the principal. The principal holds the power to revoke the agent’s authority at any time, as long as the agency isn’t irrevocable. This means the principal can cancel the agent’s permission to act on their behalf, effectively ending the agency relationship. However, if the agency is irrevocable due to certain conditions, such as being coupled with an interest or causing the agent personal loss upon revocation, the principal’s right to revoke is limited.
3. Renunciation by the Agent: Termination by renunciation occurs when the agent voluntarily gives up the authority granted by the principal. This act terminates the agency relationship, as the agent no longer wishes to act on behalf of the principal. Renunciation can happen for various reasons, such as a change in circumstances or disagreement with the principal’s decisions. Regardless of the reason, once the agent renounces their authority, the agency comes to an end.
Termination of Agency : Indian Contract Act, 1872
The Indian Contract Act 1872 regulates contracts and agency relationships in India. An agency is a situation where one person, called an agent, acts for another person, known as the principal, with the latter’s permission. Termination of the agency is when this arrangement ends. It can happen in two ways: either the parties decide to end it themselves or certain events or laws require it to stop. So, termination of the agency is simply when the agent stops acting on behalf of the principal, either because they both agreed to stop or because certain events or laws make them stop.
Geeky Takeaways:
- Termination of agency under the Indian Contract Act can occur through mutual agreement, revocation by the principal, or voluntary renunciation by the agent.
- Agency relationships can also terminate automatically under specific circumstances, such as completing the agency’s purpose, expiration of a specified time, or the death or insolvency of the principal.
- The timing of termination varies, with immediate effect for mutual agreement, upon notification for revocation, and after reasonable notice for renunciation by the agent.
- Irrevocable agency may arise in situations involving an interest vested in the agent, potential personal loss upon revocation, or partial exercise of authority by the agent.
Table of Content
- Termination of Agency under Indian Contract Act, 1872
- Termination of Agency by Act of the Parties
- Termination of Agency by Operation of Law
- When Termination of Agency Takes Effect?
- Irrevocable Agency under Indian Contract Act
- Conclusion
- Termination of Agency: Indian Contract Act, 1872- FAQs
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