Section 222 Contract Act: Agent to be indemnified against consequences of lawful acts

Section 222 of Indian Contract Act: Agent to be indemnified against consequences of lawful acts

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

The employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Contract Sec 2(h)

Legal Commentary & Landmark Judgments: Section 222

The employer of an agent is bound to indemnify them against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon them. This statutory indemnity provides essential protection to commercial intermediaries executing transactions on behalf of corporate principals.

Statutory Rights & Obligations: In financial markets, stockbroking, and procurement, an agent who incurs personal liabilities while executing authorized client orders—such as a broker executing exchange-cleared trades, purchasing raw materials, or defending third-party claims—is entitled to complete indemnification from the principal.
Framing & Alteration of Charges: The indemnity covers the purchase price, margin calls, storage charges, and all litigation expenses incurred in defending actions arising out of lawful agency operations.

Key Landmark Precedents:

Kishan Lal Kalra v. NDMC (AIR 2001 Del 402): The Delhi High Court affirmed that an agent who incurs expenditure or legal liability while lawfully carrying out the principal's business has an absolute statutory right of indemnity under Section 222.
Adamson v. Jarvis (1827) 4 Bing 66: The Court held that an auctioneer who innocently sold cattle on behalf of a principal who lacked title was entitled to full indemnity from the principal when sued for conversion by the true owner.

Legal Commentary:

Corporate directors, managing agents, and litigation representatives are protected by Section 222 against third-party lawsuits. However, under Section 224, Section 222 indemnity is strictly barred if the act authorized by the employer constitutes a criminal offense.

Section 222: Agent to be indemnified against consequences of lawful acts

Section 222 of Indian Contract Act: Agent to be indemnified against consequences of lawful acts

Legal Commentary & Landmark Judgments: Section 222