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Section 219: When agent's remuneration becomes due

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 218 All 266 Sections of Indian Contract Act Section 220

Legal Commentary & Landmark Judgments: Section 219

Section 219 governs the accrual of an agent's remuneration, establishing that in the absence of a contract to the contrary, payment becomes due only upon the complete performance of the commissioned act, while preserving the agent's right of possessory detention.

  • Complete Performance as Condition Precedent: Unless the agency agreement provides for periodic retainers or milestone stages, an agent is not entitled to claim commission until he has fully executed the bargained act.
  • Doctrine of 'Effective Cause': In brokerage, commission agency, and estate agency, the agent earns remuneration only if his introduction, negotiation, or intervention was the direct and effective cause of the concluded contract.
  • Statutory Right of Detention: Section 219 expressly empowers the agent to detain the goods and property of the principal in his possession until accrued remuneration is discharged.
Key Landmark Precedents:
  • Vasantha v. D.R. Sundararajan (2000) 2 LW 838 (Mad): The Madras High Court held that a property broker cannot claim commission merely because he introduced a prospective buyer; he must prove that his efforts were the proximate and effective cause of the executed sale deed.
  • Luxor (Eastbourne) Ltd. v. Cooper [1941] AC 108: The House of Lords established that where an agent's commission is payable upon the completion of a transaction, no term can be implied that the principal will not refuse to proceed with the sale, absent bad faith.
  • Green v. Bartlett (1863) 14 CB (NS) 681: Authoritative principle recognized across Indian High Courts that an agent who introduces a purchaser who subsequently buys directly from the principal remains entitled to commission as the effective cause.
Courtroom Practice & Strategic Litigation Guidance:

In drafting commercial agency and consultancy agreements, eliminate ambiguity by defining whether commission triggers upon the execution of a binding contract, receipt of consideration, or financial closing. When defending against an unjustified brokerage suit, demonstrate that the transaction closed through independent negotiations without the agent's causal contribution.

Section 218 All 266 Sections of Indian Contract Act Section 220