Rights of Agent under Indian Contract Act, 1872

Rights of Agent under Indian Contract Act, 1872

Who is an Agent?

An officer is an employee who acts for someone else or represents someone else in relations with third people. The person who performs or is represented by such an act is known as the ‘principal’.

There is no difference between groups of agents under the Indian Contract Act of 1872. On the one hand, a principal may assign an agent and it often requires an employment by some law-making authority.

As general or special agents, agents are differentiated by their authority. This first expression involves brokers, actors, business associates and all individuals working in a business that fills a position with a general appreciation of its nature as an authority, the extent of which is evident from the nature of its employment or its position. A special agent only has the power to perform certain special acts on a special occasion or purpose that is not part of his business or professional practise. The authority of that agent is determined by the distinction. It was reported that:

“A general officer shall be fully evident in its employer or role, and the principal, though having may have placed special restrictive limits that are not known to the other contracting party, will be bound by his conduct under that jurisdiction.

A special agent has no apparent power outside his nomination, and the principal does not, regardless of whether or not the other contracting party knows of his actions exceeding those limits.”



The relationship between an agency is established by mutual and manifest agreement between two parties establishing that one or more acts on behalf of the other party must be performed. The term “manifested” is applied because the existence of an agency relationship is measured with an objective test. This means that if the conduct of the parties and the specific circumstances indicate that they agreed that one would act on behalf of the other, the court shall establish an agency relationship. It is therefore critical that the parties have established such a relationship explicitly, realise it exists or even wish it to exist. Furthermore the parties may have specifically claimed that such a relationship does not exist.


Without any special arrangement, the agent is not responsible for the payment of any act until such time as such act is fulfilled. An agent who is guilty of fraud in the Agency’s business is not entitled to any remuneration in respect of the aspect of the business that he has misconducted. An agent may retain all money due to himself in respect of advances made or expenses properly incurred by him in the conduct of such business. An agent’s employer is obliged to indemnify him against the repercussions of all legitimate actions carried out within the jurisdiction. Where one person hires another to act and the agent acts in good faith, the employer is liable to pay the agent for the repercussions of that act. If one person hires another to behave in a criminal manner, the employer shall not be liable to the agent. The Principal shall compensate the Principal for the injuries caused to the Principal by negligence or lack of ability.

Following are the rights of agent under Indian Contract Act, 1872-

  1. Right of retainer – Section 217
  2. Right to remuneration- Section 219
  3. Right to compensation- Section 225
  4. Right to indemnify- Section 222-223
  5. Right of lien- Sales of Goods Act, 1930


“A representative may retain any money due him/her for any advance or expenses that are properly incurred for him/her and also any remuneration that he/she may be payable for acting as an agent from the amounts that are received on behalf of the principal in the agency’s affairs.”

An agent shall have jurisdiction over the amount of the theory, above (1) the amount to be paid by the agent born to him in the business and (2) the amount to be paid to the agent for his work in the business.


“If there is no special contract to pay the agent to carry out any act until such act has been finished; but the agent may hold in custody money received by the agent in respect of goods sold, even if the total goods delivered for sale have been not sold to the agent or the sale may not indeed have been complete.”

An agent shall not have the right to pay unless he has the right to pay, unless a clear contract to that effect exists. In the event that the products are partially delivered, the agent can retain money or not completely completed.


“The principal shall compensate the agent for injury1 caused by negligence or lack of capacity of the principal. Illustration A uses B in the construction of a home as a bricklayer, and sets up its own scaffold. The tears are skilllessly placed up and B is hurt as a result. The fee must be made to B.”


The employer is obliged in exercising the jurisdiction bestowed upon his agent to indemnify for the civil act. The agent shall act on behalf of the agent as the agent is the principal’s representative and acts on behalf of him.


When the principal employs an agent and the agent in this situation acts in good faith, the agent has to compensate the agent from the consequences of the act, even if it injures the rights of a third person.


According to Section 47(1), the word lien means “keep the possession of the unpaid seller of the goods which are held in his possession” and in the following cases, is entitled to retain possession until payment or price tender is issued:

  • Where the goods were sold without credit requirements.
  • Where the goods were sold on loan but the credit term expired.
  • Where the purchaser is insolvent.

Author: Sampark Sampad,
National Law University, Odisha 2nd year/ Student

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