Understanding Section 208 of The Contract Act, 1872.

 

The Contract Act, 1872

Understanding Section 208

When termination of agent’s authority takes effect as to agent, and as to third persons

208. 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

(a) ***A directs B to sell goods for him, and agrees to give B five percent commission on the price fetched by the goods. A afterwards, by letter, revokes B’s authority. B, after the letter is sent, but before he receives it, sells the goods for 100 Taka. The sale is binding on A, and B is entitled to five Taka as his commission.

(b) ***A, at Dhaka, by letter, directs B to sell from him some cotton lying in a warehouse in Rajshahi, and afterwards, by letter, revokes his authority to sell, and directs B to send the cotton to Dhaka. B, after receiving the second letter, enters into a contract with C, who knows of the first letter, but not of the second, for the sale to him of the cotton. C pays B the money, with which B absconds. C’s payment is good as against A.

(c) ***A directs B, his agent, to pay certain money to C. A dies, and D takes out probate to his will. B, after A’s death, but before hearing of it, pays the money to C. The payment is good as against D, the executor.

 

Discussion:

The termination of the authority of an agent does not effective immediately. It takes effect-

(i) Against the agent, when the fact of termination becomes known to him; and

(ii) Against third persons, when it becomes known to them.

Prepared By-

Nazmul Hasan,

Senior Judicial Magistrate at Bangladesh Judicial Service.

LL. B (Hons.) First Class First, University of Rajshahi

LL.M First Class, University of Rajshahi

11th BJS (Bangladesh Judicial Service), Merit Position-7th

Member of Youth Delegation Team to India, 2016.

Prime Minister Gold Medalist – 2017.

Bangabandhu Gold Medalist by Agrani Bank – 2023.

Former Executive Member of Rajshahi University Moot Court Society (RUMCS), (2015-2016)