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Section 220: Agent not entitled to remuneration for business misconducted

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 219 All 266 Sections of Indian Contract Act Section 221

Legal Commentary & Landmark Judgments: Section 220

Section 220 penalizes an agent who commits misconduct in the business of the agency by stripping him of any entitlement to remuneration for that part of the agency business which he has misconducted.

  • Statutory Forfeiture of Remuneration: An agent guilty of fraud, gross negligence, deliberate breach of instructions, or secret self-dealing forfeits his contractual right to commission as a matter of public policy.
  • Rule of Severability: Forfeiture is strictly confined to that part of the agency transactions tainted by misconduct; properly and faithfully executed separate transactions remain compensable.
  • Cumulative with Damage Claims: Forfeiture of commission under Section 220 is non-exclusive; the principal retains his independent common law and statutory rights under Section 212 to recover damages for any loss sustained.
Key Landmark Precedents:
  • Andrews v. Ramsay & Co. [1903] 2 KB 635: The King's Bench held that an estate agent who accepts a secret bribe or commission from the purchaser forfeits all claim to commission from his principal and must disgorge the secret profit.
  • Salomons v. Pender (1865) 3 H&C 639: Held that an agent who acts in breach of his fiduciary duty by secretly purchasing the principal's property through a syndicate cannot claim any commission on the sale.
  • Ram Lal v. Asian Commercial Bank (1928) ILR 9 Lah 350: The High Court ruled that serious neglect and unauthorized handling of commercial instruments disentitles a financial agent from charging commission on the mishandled transactions.
Courtroom Practice & Strategic Litigation Guidance:

When resisting a broker's or agent's suit for unpaid commission, plead Section 220 as a complete statutory defense supported by specific particulars of bad faith or negligence under Order VI Rule 4 CPC. File a simultaneous counter-claim for any consequential losses suffered by the principal under Section 212.

Section 219 All 266 Sections of Indian Contract Act Section 221