Different Modes By Which Agency Can Be Terminated

An Agency Agreement is defined on the premise of a legal relationship between the Principal and the Agent, whereby the agent can work on his behalf under some cases by the Principal and to get the service, this implies that the principal has control over the agent. An agency Agreement is considered an agency Contract and it defines the roles for the principal that the Agent must do. As in India, the law regarding the Agency and most other jurisdictions is characterized as a relationship within which one party, namely an agent, has the proper to act on behalf of another person, namely the principal, to keep up legal relations between the latter and third parties.

Termination of Agency – Section 201 to 210 of the Indian Contract Act 1872 lay down the provision relating to the termination of Agency.

Provisions pertaining to the Concerned Act.

Section 201 of Indian Contract Act – An agency is terminated by the principal revoking his authority, or by the agent renouncing the business of the agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors.

Termination of Agency Contract

Termination of agency may happen in two ways either by the operation of law or by the act of parties. Termination of agency by the operation of law – Subsequent are the situations where the agency is terminated by the operation of law.

Expiry of time: Sometimes contract of agency may get formed for a selected period.

Fulfillment of object: Occasionally the contract of agency could also be found for a specific objective or to try and do a selected venture. In these type of cases, termination of agency occurs after the completion of the venture.

Death or lunacy of either party: Whenever principal or agent encounter death or lunacy, agency contract gets terminated.

Insolvency of the Principal: Principal should have the ability to contract. When person is unable to satisfy creditors or discharge liabilities, he is eligible for the capacity of Contract and termination of agency takes place.

Termination of agency by the act of Parties: The subsequent are the situations where the agency is terminated by the act of parties.

Termination of agency by the Agent: Agent can also terminate the agency contract by giving notice to principal but by doing so if principal comes across any suffering, agent needs to compensate.

Termination of agency by both the parties to the contract: By means of sympathy between principal and agent, the contract of agency may come to an end.

Case Laws:

R. Sayani v. Bright Bros (P) Ltd, AIR 1980 Mad 162

Where an organization has been formed for an outlined amount of your time, liability for its premature termination will must be compensated if the termination failed to have appropriate justification. There was no fair warning given for the premature decision of the department. The agent received Rs. 4000 a month. The court was of the opinion that there should are a minimum of three months’ warning. Correspondingly, a present of Rs. 12,000 was allowed.

 Sukhdev v. Commr of Endowments, (1998) 1 BC 403 (AP)

Through the expiry of the name, center involves an automatic end. Where a pump was to be regulated by the agency for a specific time, it absolutely was held that the agent was obligated to vacate the premises at the tip of the amount.

Trueman v. Loder (1840) 11 Ad & El 5892014

 A was dealing here as B’s agent. With the authority of B, all parties with which A entered contracts therein undertaking is held to own the proper to carry B accountable until B notifies the globe that the authority of A is removed, and it makes no sense whether the agent intended to retain the contract on his own account in a very specific situation. The court dismissed the claim that it absolutely was quite unfair to ask the principal to inform the entire world that he had revoked his agent’s attorney’s power which it must not be expected that he would contact someone with whom the agent was willing to enter a deal and inform him of the termination. 

To conclude, an agency agreement may be a kind of general contract. As such, except where the agency is irrevocable, an agency can terminate within the same way as a contract is discharged. Only the act or consent of the parties to the agency or the enforcement of the law may terminate the link between the principal and the agent. Subsequent incidents may result within the business being terminated. These could also be physical, as if the topic matter is lost, as an example, or the principal or agent dies or gets insane. Alternatively, they will be lawful, as if the principal or agent becomes bankrupt, or the partnership becomes unlawful (for instance, if the principal becomes an alien enemy). the results of termination are that as long because the principal and the agent are concerned, the rights conferred at the time of termination can continue, although no new rights are often established, a minimum of until the agent has obtained notice of termination. It would be determinable within the same manner if the entity has been formed by consensus. A seamless entity can even be defined by offering, or within the absence of a good warning for the duration of notice as stated therein arrangement. Finally, if a celebration behaves in a very fashion that is compatible with the agency’s continuity, it may, of course, be dismissed, although this might well produce to grounds of redress for violation of contract. As far as termination by operation by law is worried, if the organization is for a selected contract, the partnership shall end at the conclusion of that transaction. It will cease at the top of that period if it is for a specified period.

Aditya Mehrotra
Hello Everyone, this is Aditya. I am a First year B.A.LL.B. student from Symbiosis Law School, Pune. Being a firm believer of the Pt. Nehru's quote, "Facts are Facts and will not disappear on account of your likes", My aptitude for Law and Journalism is witness to the basic fact that you will find me in the library reading my favorite Legal Books, my favorite being 'The Courtroom Genius' by Nani Palkhivala. I chose Law as my career because I was inspired by the likes of Lawyers like Nani Palkhivala and Ram Jethmalani. I always wanted to contribute to the field of Social Work through Legal means and Emancipation of the Poor. My oratory skills won various accolades both at regional and global level. In my opinion dream does not become reality through magic; it takes sweat, determination, and hard work.