Law:

Section:

(a) Contract Act (IX of 1872)--- ----S. 202---Agency coupled with interest---Concept---Scope and applicability. The concept of an `agency coupled with interest' is a special concept. It envisages a pre-existing interest of the agent in the subject matter of the agency which is sought to be protected through creation of the agency and not an interest arising therefrom. The concept can be clearly comprehended through the illustration given in section 202 of the Contract Act. Where the agency is created by deed, or for valuable consideration, and the authority is given to effectuate a security to secure the interest of the agent, the authority cannot be revoked. Thus, if an agreement is entered into on a sufficient consideration whereby an authority is given for the purpose of securing some benefit to the donee of the authority, the authority is irrevocable on the ground that it is coupled with an interest. So, an authority to sell in consideration of forbearance to sue for previous advances, an authority to apply for share to be allotted on an underwriting agreement a commission being paid for the underwriting, and an authority to receive rents until the principal and interest of a loan have been paid off or to receive money from a third party in payment of a debt, have been held to be irrevocable. On the other hand, an authority is not irrevocable merely because the agent has a special property in or a lien upon goods to which the authority relates, the authority not being given for the purpose of securing the claims of the agent. 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…

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