Section 227 Indian Contract Act 1872
Section 227 of the Indian Contract Act 1872 is about Principal how far bound, when agent exceeds authority. It is under “Effect of agency on contracts with third persons” of CHAPTER X of the Act. CHAPTER X is titled AGENCY.
Principal how far bound, when agent exceeds authority
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.
Illustration
A, being owner of a ship and cargo, authorizes B to procure an insurance for 4,000 rupees on the ship. B procures a policy for 4,000 rupees on the ship, and another for the like sum on the cargo. A is bound to pay the premium for the policy on the ship, but not the premium for the policy on the cargo.
See also:
Section 226 Indian Contract Act 1872 (Enforcement and consequences of agent’s contracts)
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