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Section 228: Principal not bound when excess of agent's authority is not separable

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 227 All 266 Sections of Indian Contract Act Section 229

Legal Commentary & Landmark Judgments: Section 228

Section 228 protects the principal against unauthorized contracts where the agent exceeds his authority and the excess is so inextricably intertwined with the authorized part that separation is impossible, entitling the principal to repudiate the entire transaction in toto.

  • Inextricable Indivisibility: Applies where the unauthorized terms, prices, collaterals, or obligations are woven into the fabric of the contract so deeply that separating them would rewrite the agreement or alter its commercial essence.
  • Complete Statutory Immunity of Principal: The principal is not bound to recognize or perform any part of the transaction and can lawfully repudiate the entire contract without incurring liability to the third party.
  • Third Party's Exclusive Recourse Against Agent: The third party's sole remedy lies against the delinquent agent under Section 235 for damages for breach of implied warranty of authority.
Key Landmark Precedents:
  • Premila Devi v. Peoples Bank of Northern India Ltd. AIR 1938 PC 284: The Privy Council ruled that where bank directors made an indivisible compromise that fundamentally exceeded their powers, the transaction could not be partially salvaged and was wholly void against the company.
  • Haji Noor Mohammad v. P.M. Abdul Sattar AIR 1959 Mys 135: The High Court held that where an agent authorized to buy a specific grade of commodity purchased a mixed, inferior bulk at a single blended price, the transaction was indivisible and the principal was not bound to accept any part.
  • United Bank of India v. Ramdas Mahadeo Prashad (2004) 1 SCC 252: The Supreme Court held that an unauthorized composite compromise executed by an advocate or representative without express instructions is indivisible and cannot bind the client.
Courtroom Practice & Strategic Litigation Guidance:

To establish a defense under Section 228, file the original agency deed alongside the contested third-party agreement, establishing that enforcing any fraction would distort the agreed pricing, quantity, or obligations, thereby legally justifying total repudiation.

Section 227 All 266 Sections of Indian Contract Act Section 229