Law:

Section:

(a) Contract Act (IX of 1872)-------S. 202---Agency coupled with an interest---Concept---Scope and application of S.202, Contract Act, 1872---Contract of agency by its very nature is personal to the parties and revocable at their volition subject to agreed terms and does not create eternal legal relations---Provision of S.202, Contract Act does not get attracted merely because the agent has acquired substantial interest in the returns arising from the agency---Making of substantial investments in business of agency does not make the agency irrevocable---Section 202 applies only where an agent has a special kind of interest i.e. a pre-existing interest in the subject­matter of the agency which is sought to be protected through creation of the agency and not an interest arising therefrom---Such contract, however, in certain exceptional circumstances can be considered irrevocable---Examples. Section 202, Contract Act, 1872 lays down an exception to the general rule. A contract of agency by its very nature is personal to the parties and revocable at their volition subject to agreed terms. It does not create eternal legal relations. Under this section in certain exceptional circumstances, such contracts can be considered irrevocable, the most common examples of such contracts are when the owner of certain goods appoints his creditor as agent to sell the goods and recover the amount advanced or where the owner of immovable property, having agreed to transfer such property appoints, before formal title is passed, the vendee as his agent to manage the property or effect the final transfer of title. In such cases interest in the property has already been created in favour of another who is appointed agent primarily to secure such interest. The principal is precluded from revoking the authority of such agent unless otherwise agreed, because the main interest in the property is not retained by him but passed on to the agent. The interest of the agent, forming subject-matter of the agency, is to be some sort of an adverse nature qua the principal. So, according to the true construction and scope of section 202 the agency can be said to be coupled with interest where the…

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