Section 182 Indian Contract Act 1872 - Agent and Principal Defined
Section 182 of the Indian Contract Act, 1872 begins Chapter X on agency and defines the two basic parties to an agency relationship: the agent and the principal.
What does Section 182 of the Indian Contract Act mean?
In simple terms, an agency relationship exists where one person is engaged to act for another person or to represent that person in dealings with third persons. The person acting or representing is the agent, while the person on whose behalf the act is done or representation is made is the principal.
Text of Section 182 - Agent and principal defined
Section 182. An "agent" is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the "principal".
The provision is contained in Chapter X of the Indian Contract Act, 1872 under the subject of agency. The official India Code text may be consulted for the current central Act.
Official Indian Contract Act, 1872 - India CodeDefinition of agent under Section 182
An agent is a person employed to perform an act for another person or to represent another person in dealings with third persons. The definition therefore covers both doing an act on another person's behalf and acting in a representative capacity in transactions with others.
Definition of principal under Section 182
A principal is the person for whom the act is performed or the person who is represented by the agent. The principal is therefore the person on whose behalf the agent acts within the authority given or otherwise recognised by law.
Essential features of an agency relationship
- There are ordinarily two primary parties: the principal and the agent.
- The agent acts for, or represents, the principal.
- The relationship may involve dealings with third persons.
- The scope of the agent's authority is important in deciding when an act binds the principal.
- Agency should be read with the succeeding provisions of Chapter X dealing with capacity, creation and extent of authority.
Simple example of principal and agent
Suppose A authorises B to purchase goods from C on A's behalf. B acts as A's agent in the transaction, A is the principal, and C is the third person with whom the agent deals. Whether a particular act of B binds A will depend on the authority conferred on B and the applicable provisions of the Act.
Related provisions on appointment and authority of agents
Section 182 provides the definitions. The immediately following provisions explain important parts of the legal framework of agency. Section 183 deals with who may employ an agent; Section 184 deals with who may be an agent; and Section 185 states that consideration is not necessary to create an agency.
Section 182 and principal-agent relationship under GST
The concept of agency under the Contract Act may also be relevant when another statute uses a principal-agent relationship. For example, the Central Board of Indirect Taxes and Customs has referred to Section 182 while explaining the representative character of an agent in the context of Schedule I of the Central Goods and Services Tax Act, 2017.
Read the Indian Contract Act, 1872 on India CodeFrequently asked questions
Who is an agent under Section 182?
An agent is a person employed to do an act for another or to represent another in dealings with third persons.
Who is a principal under Section 182?
The principal is the person for whom the act is done or the person represented by the agent.
Does Section 182 itself define the extent of an agent's authority?
No. Section 182 defines agent and principal. The nature and extent of authority are dealt with by other provisions in Chapter X of the Indian Contract Act, including the provisions concerning express and implied authority.
Is consideration necessary to create an agency?
Section 185 of the Indian Contract Act, 1872 provides that consideration is not necessary to create an agency.
This page is intended as a general legal information resource. For a dispute involving an agency relationship, the agreement, authority granted, conduct of the parties and other applicable statutory provisions should also be examined.