Sections 226 and 227 of the Indian Contract Act 1872: Agent Contracts and Excess of Authority
Sections 226 and 227 form part of the law governing the effect of agency on contracts with third persons. Section 226 states the general rule that authorized contracts and acts made through an agent have the same legal consequences as if the principal had acted personally. Section 227 deals with a case in which an agent exceeds authority but the authorized part of the transaction can be separated from the unauthorized part.
Law checked against the official India Code text on 21 September 2026.
- Section 226: an authorized act or contract of an agent operates, in law, as the act or contract of the principal.
- Section 227: where an agent exceeds authority and the authorized portion is separable, only the authorized portion binds the principal.
- Section 228: the next provision addresses the different situation where the excess of authority is not separable.
Section 226 - Enforcement and consequences of agent's contracts
Statutory rule:
Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person.
Meaning of Section 226
Section 226 embodies the basic effect of a duly authorized agency. When an agent acts for the principal within the authority conferred on the agent, the resulting contract or obligation is treated as having the same legal effect as a contract or act of the principal personally. The provision therefore connects the principal directly with the legal consequences of the authorized act of the agent.
Illustrations to Section 226
Illustration (a): A buys goods from B knowing that B is an agent for their sale but without knowing the identity of the principal. The principal may claim the price from A. In the principal's suit, A cannot set off a debt personally due from B against the principal's claim.
Illustration (b): A is B's agent and has authority to receive money for B. If A receives from C money due to B, C is discharged from the obligation to pay that amount to B.
Practical effect
The section is relevant where a person contracts or performs an act through an authorized representative. The central question is whether the act was done within the agent's authority. If it was, Section 226 gives the transaction the same legal consequences as an act performed by the principal in person.
Section 227 - Principal how far bound, when agent exceeds authority
Statutory rule:
When an agent does more than he is authorized to do, and when the part of what he does which is within his authority can be separated from the part which is beyond his authority, so much only of what he does as is within his authority is binding as between him and his principal.
Meaning of Section 227
Section 227 applies where an agent goes beyond the authority given by the principal, but the authorized and unauthorized parts can be separated. In that situation, the principal is bound only by the separable part that falls within the agent's authority. The excess portion does not become binding merely because it was combined with an authorized act.
Illustration to Section 227
A owns a ship and cargo and authorizes B to obtain insurance for 4,000 rupees on the ship. B obtains one policy for 4,000 rupees on the ship and another policy for the same amount on the cargo. The authority extended only to insurance of the ship. Because the two policies are separable, A is bound to pay the premium on the ship policy but not the premium on the cargo policy.
Difference between Sections 227 and 228
The key concept in Section 227 is separability. If the authorized part can be separated from the unauthorized part, the authorized part remains binding. By contrast, Section 228 deals with excess authority that cannot be separated from the authorized transaction; in that situation the principal is not bound to recognize the transaction.
How Sections 226 and 227 work together
Section 226 states the normal consequence of an agent acting within authority: the principal is legally affected as though the principal had acted personally. Section 227 then qualifies the position for a transaction containing both authorized and unauthorized elements. The court or decision-maker must consider the scope of the authority and whether the authorized portion can be separated from the excess.
Legal note: The precise result in a dispute depends on the terms and scope of the agency, the facts known to the parties, and other applicable provisions of the Indian Contract Act, 1872, including provisions dealing with authority, ratification, excess authority and dealings with third persons.
Related provisions on agency
For the provisions immediately following Sections 226 and 227, see Sections 228 and 229. Further provisions deal with the personal liability of agents, undisclosed principals, contracts made with an agent believed to be the principal, pretended agents and unauthorized acts subsequently attributed to the principal.