Indian Contract Act Section 208 — When termination of agent’s authority takes effect as to agent, and as to third persons
CHAPTER X AGENCY — Revocation of Authority
Commercial / Corporate
Summary
The termination of an agent’s authority does not take effect, as far as the agent is concerned, until the agent actually becomes aware of the termination. So if the principal ends the agency but does not tell the agent, the agent’s authority continues to operate for the agent’s own purposes until the agent learns of the end.
Similarly, as far as third persons are concerned, the termination does not take effect until those third persons actually know about it. If a third person deals with the agent without knowing that the authority has been terminated, that dealing is still valid as against the principal, because the termination only binds the third person once the knowledge reaches them.
Official Text
The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, or, so far as regards third persons, before it becomes known to them. Illustrations absconds. C’s payment is good as against A.