Ways in Which an Agency Can Be Terminated
- Principal’s Actions: An agency is terminated by the principal revoking his authority, or by the agent renouncing the business of the agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent.
Common Rules for Terminating Agency Relationship
- Withdrawal by a Party
- Termination by the Principal
- Renunciation by Agent
- Death or Incapacity of Agent
- Death or Incapacity or Bankruptcy of the Principal
How Time Can Terminate Agency
A) By agreement – the Agency can be terminated at any time by mutual agreement between the parties. B) Revocation by the Principal – when the Principal revokes the Agent’s authority, the Agency gets terminated.
Termination of Agency Relationship
- An agency will terminate by operation of law when one or the other party dies or becomes incompetent, or if the object of the agency becomes illegal. A principal may revoke an agent’s authority to act on the principal’s behalf.
- Death or Insanity of Either Party: The agency is terminated when the agent or principal dies or becomes insane.
Points of Termination for Agency Relationship
- However, that is not considered termination by operation of law.
- Completion of business or expiry of time – The Agency gets terminated when the business of the Agency gets completed and the relationship between the Principal and Agent also ends.
- Death or insanity of principal or agent – Section 209 of the Indian Contract Act 1872 imposes an agent, duty to terminate the contract of agency on the death of the principal.
Events Triggering Termination of Agency
- An agency relationship will automatically terminate upon the occurrence of certain events include death, insanity, or bankruptcy of either the principal or agent. In addition, an agency can be terminated by operation of law. The death of the principal operates as an immediate and absolute revocation of the agent’s authority.