Section 88 The Indian Contract Act, 1872
🔹 Section 88 – The Indian Contract Act, 1872
“Advantage gained by a fiduciary”
When one person is bound to protect the interests of another (a fiduciary relationship), and gains any advantage directly or indirectly from that relationship, they must hold that advantage for the benefit of the person whose interest they were bound to protect.
📘 Explanation:
This section is based on the principle of fiduciary duty and equity.
If a person in a position of trust (like agent, trustee, legal guardian, partner, etc.) gains any benefit or profit while acting in that capacity:
They cannot keep it for themselves.
They must account for it and transfer it to the person to whom the duty is owed.
✅ Key Concepts:
Fiduciary relationship: A relationship based on trust (e.g., agent-principal, trustee-beneficiary, director-company).
Advantage/profit must be accounted for, even if gained lawfully, if it arose from the trusted position.
Meant to prevent conflicts of interest and self-dealing.
🧑⚖️ Illustration (from the Act):
A, an agent, agrees to buy goods on behalf of B.
Instead, A buys them for himself and later resells them to B at a higher price.
A must account to B for the profit he made.
⚖️ Legal Principle:
"No one in a fiduciary position should make a secret profit."
🔗 Related Sections:
Section 215 & 216 – Relating to agent’s duty to account for secret profits.
Indian Trusts Act, 1882 – For trustees' fiduciary duties.
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