Question: A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debt due to him from A. By describing the situations when principal cannot revoke the agency, comment on the given problem that whether A has authority to revoke the agency or not?

 

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Questions

A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debt due to him from A. By describing the situations when principal cannot revoke the agency, comment on the given problem that whether A has authority to revoke the agency or not?

Or,

Write a short note on irrevocable agency.

 

Answer

Section 201-210 of ICA deals with the circumstances when the agency can or can’t be terminated. When, the revocation of agency becomes out of the power of the principal, it is known as an irrevocable agency.

 

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1.    When the agency is coupled with interest, Sec 202 of ICA:

Where the agent has himself an interest in the property which forms the subject-matter of agency, the agency cannot, any contract to the contrary, be terminated to the prejudice of such interest. Provided that:

I.                     It is essential that the interest of the agency should be existing at the time of creation of agency. Therefore, if the interest was created subsequently, the agency can be revoked.

II.                   interest of the agent must be substantial, i.e., other than the commission to which he is entitled.

For example: Ramesh gives authority to Ganesh to sell his 5 tuns of sugarcane, and to pay himself, out of the proceeds, the debt due to him from Ramesh. Now he cannot revoke the authority, nor can it be terminated by his insanity or death.

 

2.    When an agent has incurred personal liability:

When the agent has purchased the goods on his personal liability, or where he made the payment of the good from his personal accounts, the agency cannot be terminated.

For Example – P appoints Q as his agent. Q purchases some wheat as per the instructions of P in his personal name. Now, in such a case P cannot revoke the agency.

 

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3.    Where the agent has partly exercised the authority, Sec 204 of ICA:

The principal cannot revoke the authority given to his agent after the authority has been partly exercised, so far as regards such acts and obligations as arisen from acts already done in the agency.

For Example – Mr. X appoints Mr. Y as his agent. On Mr. X’s direction, Mr. Y purchases 100kg rice in the name of his principal ‘Mr. X’. Now, in such a case Mr. X cannot revoke the agency.

 

Here, in the given problem, A was already in debt, and in order to repay the same to B, he had conferred the authority to B to sell his certain land and clear his dues. Therefore, since the agency is coupled with the interest, it can’t be revoked subsequently, nor it can’t be terminated due to his death, insolvency or insanity.

 

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