Section 221 The Indian Contract Act, 1872
Section 221 – The Indian Contract Act, 1872
Title: Right of principal to indemnity from agent
🔹 Bare Act Language:
Section 221 –
"Where an agent enters into a contract on behalf of his principal, the principal is bound to indemnify the agent against any liability incurred by him in the execution of the business of the agency, if the agent acts within the scope of his authority."
🔍 Explanation:
When an agent makes a contract or incurs any liability in the course of performing his duties for the principal,
The principal must compensate (indemnify) the agent for those expenses or liabilities,
Provided the agent acted within the authority granted by the principal.
🔹 Key Points:
Protects the agent from losses arising while acting for the principal.
Applies only if agent acts within authority (express or implied).
If agent exceeds authority, principal may not be liable.
🔹 Illustration:
A appoints B as his agent to purchase goods.
B enters into contracts and pays some advance money.
Later, the principal refuses to reimburse.
Under Section 221, A must indemnify B for such expenses made during the agency business.
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