Section 182 of the Indian Contract Act, 1872: "Agent" and "principal" defined

The provision

An "agent" is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the "principal".

Indian Contract Act, 1872, Section 182. Official text.

What Section 182 Defines

Section 182 of the Indian Contract Act, 1872 establishes the foundational legal relationship between an agent and principal. An agent is anyone hired or authorized to perform actions on behalf of someone else, or to act as their representative when dealing with third parties. The principal is the person who employs the agent and on whose behalf the agent acts. This section is definitional but carries profound consequences: it marks the boundary of agency law and determines when one person's actions legally bind another.

Core Practical Application

In business practice, agency relationships are ubiquitous but often undocumented. A sales manager acting for a company, a lawyer representing a client, a distribution partner signing contracts on your behalf, or even an employee authorized to purchase supplies all fall within Section 182's definition. The critical point is authorization: the agent must be employed or appointed to do the act or represent the principal. Without this employment or appointment (express, implied, or apparent), no agency relationship exists under this definition, regardless of what either party claims. This means the principal is not automatically liable for the agent's unauthorized acts, and vice versa.

The definition also clarifies that agency is bilateral: it involves both a mandate (the agent doing something) and representation (the agent acting in the principal's shoes in third-party dealings). A person can be an agent for one purpose but not another, or an agent for one principal but not another.

Drafting and Contract Implications

When drafting agency agreements or clauses, Section 182 tells you what must be established: clear appointment, scope of authority, and the relationship between the parties. Many contracts fail because they assume an agency relationship without defining it explicitly. Your agreement should specify whether the agent has actual authority, apparent authority, or both. Define the specific acts or dealings the agent may undertake. This prevents disputes where third parties claim they believed an agent had broader powers than actually granted.

In contract negotiation, Section 182's definition affects liability allocation. If you're the principal, you need to know exactly what your agent can commit you to. If you're the agent, clarify your authority boundaries in writing to avoid personal liability for acts outside your mandate. When contracting with parties who claim to represent others, verify their agency status. A person is not automatically an agent simply because they claim to be; there must be an employment or appointment relationship.

Drafting templates should include: (1) explicit appointment language ('X is appointed as agent of Y'); (2) enumerated powers ('The agent may do A, B, and C'); (3) authority limits ('The agent may not do X, Y, Z without prior written consent'); (4) ratification clauses (what happens if the principal later accepts unauthorized acts); and (5) termination provisions (how and when the agency ends). Without these, courts will infer the scope of authority from conduct, custom in the industry, and the nature of the relationship, which creates uncertainty.

Interaction with Other Agency Provisions

Section 182 is the entry point to Indian agency law. It works with Section 183 (who cannot be an agent), Sections 185-188 (how agency is created), Sections 189-196 (the agent's authority), and Sections 210-217 (principal's liability for the agent's acts). Understanding Section 182's definition is essential before navigating these provisions, as each builds on the foundational relationship established here.

This page explains the law in general terms for information only. It is not legal advice. Always read the provision in its official source and take advice on your specific facts.