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Section 186: Agent's authority may be expressed or implied

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 185 All 266 Sections of Indian Contract Act Section 187

Legal Commentary & Landmark Judgments: Section 186

Section 186 provides that the authority of an agent may be either express or implied, establishing the dual legal foundations upon which an agent's power to bind the principal and create external legal relations rests.

  • Express Authority Channel: Authority explicitly conferred through direct spoken words or written formal instruments such as powers of attorney, board resolutions, or letters of authorization.
  • Implied Authority Channel: Authority inferred from the relationship of the parties, conduct, prior course of dealings, circumstances of the case, or the customary duties of an office or employment.
  • Equally Binding Legal Effect: Both express and implied authority produce identical legal consequences: they empower the agent to bind the principal to third parties within the scope of that authority.
Key Landmark Precedents:
  • Harshad J. Shah v. LIC of India (1997) 5 SCC 64: The Supreme Court held that an agent's authority may be express or implied under Sections 186-187, but an implied authority cannot be invoked to override express statutory regulations or known prohibitions.
  • Syed Abdul Khader v. Rami Reddy (1979) 2 SCC 601: The Supreme Court examined express powers of attorney, holding that written instruments are strictly construed, but implied authority necessarily extends to all incidental acts required to carry out the express mandate.
Courtroom Practice & Strategic Litigation Guidance:

When suing on a contract executed by an agent, plead both express and implied authority in the alternative. If written authorization is disputed, establish a continuous course of commercial dealing, acquiescence, or customary practices where the principal routinely honored similar commitments made by the agent.

Section 185 All 266 Sections of Indian Contract Act Section 187