When can the principal revoke the agent’s authority The principal can revoke the authority Special

Special Contracts
given to his agent at any time before the authority has been exercised so as to bind the principal
provided the agency is not irrevocable [Section 203].
Revocation cannot be exercised in respect of partly exercised authority The principal can- Notes
not revoke the authority given to his agent after the authority has been partly exercised, as regards
such acts and obligations that arise from acts already done in the agency. In other words, where the
agent has partly exercised his authority, the principal may revoke agency for future acts only [Sec-
tion 204]. Examples to this effect are presented in Box 6.19.

Box 6.19 Revocation of Authority for Future Acts of Agent

Example 1
A authorises B to buy 1000 bales of cotton on account of A and to pay for it out of A’s money, which
remains in B’s hands. B buys 1000 bales of cotton in his own name, so as to make himself person-
ally liable for the price. A cannot revoke B’s authority so far as payment for the cotton is concerned.
Example 2
A authorises B to buy 1000 bales of cotton on account of A, and to pay for it out of A’s money remain-
ing in B’s hands. B buys 1000 bales of cotton in A’s name, so as not to render himself personally liable
for the price. A can revoke B’s authority to pay for the cotton [Appended to Section 204].

Compensation for revocation Where there is an express or implied contract that the agency
should be continued for any period of time, the principal must make compensation to the agent for
any previous revocation of the agency without sufficient cause [Section 205].
Notice of revocation Reasonable notice must be given of revocation or renunciation, otherwise,
the damage thereby resulting to the agent must be made good to by the principal [Section 206].
Revocation may be expressed or implied Revocation may be expressed or may be implied in
the conduct of the principal or agent, respectively [Section 207]. For example, A empowers B to let
A’s house. Afterwards A lets it himself. This is an implied revocation of B’s authority.

Renunciation of authority by the agent

An agency also comes to an end if the agent himself/herself renounces his/her authority to
contract on behalf of the principal. Section 206 says that reasonable notice must be given of
renunciation, otherwise, the damage thereby resulting to the principal must be made good by
the agent. Like, revocation, renunciation may also be expressed or implied in the conduct of
that agent. For example, A employs B to sell his car within a week. B fails to sell the car within the
stipulated time. There is an implied renunciation of authority on part of B.
By Mutual Agreement An agency, like any other agreement, can be terminated, at any time by
mutual agreement between the principal and the agent.

Termination of agency by operation of law

The relationship of principal and agent comes to an end automatically under any of the follow-
ing circumstances.

Completion of business
An agency automatically comes to an end when its business is completed [Section 201]. For
example, A employs B to sell his goods. The authority of B to sell goods ceases to be exercisable as
soon as the sale is complete.

Self-Learning
Material 117