Agent has exercised authority partly: 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 arise from acts already done in the agency (Sec204).
1) A authorizes B to buy 1,000 bales of cotton on account of A and to pay for it out of A’s money remaining in B’s hands. B buys 1,000 bales cotton in his own name, so as to make him self personally liable for the price. A cannot revoke B’s authority so far as regards payment for the cotton.
2) A authorizes B to buy 1,000 bales of cotton on account of A, and to pay for it out of A’s money remaining in A’s name, and so as not render personally liable for the price. A can revoke B’s authority to pay for the cotton.
Section 222 provides that the principal shall indemnify the agent, this rule is therefore based on the principle that when the agent has exercised his authority partly on behalf of the principal and incurred liabilities and obligations, principal cannot withdraw and leave the agent alone to face liabilities and obligations.
Agency coupled with interest: (Sec 202) Where the agent has himself an interest in the property which forms the subject matter of the agency, the principal cannot revoke agent’s authority to the prejudice of such interest. The parties may however contract otherwise. Where the authority provides benefit to the agent, it is agency coupled with interest. An authority coupled with interest is generally irrevocable.
1) 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. A cannot revoke this authority, nor it be terminated by his insanity or death.
2) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell cotton; and to repay himself out of the price, the amount of his own advances. A cannot revoke the authority, nor is it terminated by his insanity or death.
The above illustrations show that agent has an interest in the transaction. Where the authority gives some benefit to the agent, such authority is irrevocable. Interest in the property would include interest by way of security, lien or any special right or interest. For example, A is appointed by B to recover a sum of money due by C to B, and to pay himself, out of the amount so recovered, the debts due to him from the principal. B cannot revoke A’s authority has A an interest in the subject matter of the agency.
Interest could be inferred from the language of the document and from the course of dealings between the parties. Interest of the agent must exist at the time of creation of the agency.
When agent is personally liable: When agent incurs personal liability, the agency cannot be revoked.
When revocation takes effect?
Revocation of authority terminates the agent’s authority. The termination of the authority takes effect as regards the agent, after it becomes known to him. As regards third persons, termination of authority takes after it becomes known to them (Sec 208).
Where agent is allowed to remain in possession of the premises for purposes of carrying on agency business of a company, on termination of agency, agent has no right to remain in possession of premises. Agent is not entitled to interfere with company’s business.
1) A directs B to sell goods for him and agrees to give B, 5 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 Rs 100. The sale is binding on A and B is entitled to five rupees as his commission.
2) A, at Madras, by letter, directs to sell for him some cotton lying in a warehouse in Bombay and afterwards by letter, revokes his authority to sell and directs B to send the cotton to Madras. 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.
3) 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 against D, the extreme.
The termination of the authority of an agent causes the termination of the authority of all sub-agents appointed by him (Sec 210).