Termination of Agency

An agency may the terminated

by act of parties or by operation
of law.
 Termination of Agency
I. Termination by act of parties
Revocation and Renunciation : The principal
may, by notice, revoke the authority of the
agent. The agent may similarly, by notice,
renounce the business of agency.
Revocation and renunciation can be express
or may be implied from the conduct of the
parties.
Example :
A empowers B to let A’s house. Afterwards A lets
it himself. There is an implied revocation of B’s
authority.
I. Termination by act of parties

Compensation of Revocation and

Renunciation : Where there is an express or
implied agreement to continue the agency for
any length of time , and the contract of
agency is revoked or renounced with
sufficient cause, compensation must be paid
to the injured party.
I. Termination by act of parties
Irrevocable agency : The principal cannot
revoke the authority of the agent in the
following cases:
1. When the agent has an interest in the
subject-matter of the contract, his
authority cannot be revoked so as to
prejudice that interest. This is known as
agency coupled with interest.
Example :
A gives authority to B to sell A’s land to pay
himself out of the proceeds, the debts due to
him from A. A cannot revoke this authority, nor
can it be terminated by his insanity or death.
I. Termination by act of parties

2. The authority of the agent cannot be

revoked once it has been exercised so as
to bind the principal.
3. When the agent has partially exercised
his authority, the principal cannot by
revocation affect the acts already done.
II. Termination by operation of
Law
An agency may terminate by operation of law
in any of the following ways :
1. Efflux of time : When the agency is for a
fixed period of time, it terminates on the
expiry of that time.
2. Performance of the object : Where the
agency is for a particular object, it
terminates when the object is
accomplished or when the accomplish-
ment becomes impossible.
II. Termination by operation of
Law
3. Determination of subject matter : When the
subject-matter of the agency comes to
end, the agency terminates.
4. Death or insanity of the principal or agent :
Death or insanity of the principal or the
agent, terminates the agency. In case of a
company, its winding up and in case of a
firm, its dissolution has the same effect
II. Termination by operation of Law
5. Insolvency of the principal : If the principal
is adjudicated an insolvent, the agency
terminates . But insolvency of the agent
does not terminate the agency.
6. The principal becoming an alien enemy : If
the principal and the agent belong to
different countries and war breaks out
between the two countries, the contract of
agency is terminated.
7. Termination of the sub-agent’s authority :
The sub-agent’s authority comes to an end
when the agent’s authority terminates.