Indian Contract Act, 1872 · Chapter X: Agency · Agent’s duty to principal
Section 211: Agent's duty in conducting principal's business
In plain words
An agent must conduct the principal's business according to the principal's directions, or, if none are given, according to the local custom for that kind of business. If they act otherwise, they must make good any loss and account for any profit.
Example: A broker sells goods on credit where the custom is not to do so, and the buyer becomes insolvent. The broker must make good the loss.
A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.
Read the in-depth explanation, with key Supreme Court rulings ↓
Official text
An agent is bound to conduct the business of his principal according to the directions given by the principal, or, in the absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and if any profit accrues, he must account for it.
Illustrations
(a) A, an agent engaged in carrying on for B a business, in which it is the custom to invest from time to time, at interest, the moneys which may be in hand, omits to make such investment. A must make good to B the interest usually obtained by such investments.
(b) B, a broker, in whose business it is not the custom to sell on credit, sells goods of A on credit to C, whose credit at the time was very high. C, before payment, becomes insolvent. B must make good the loss to A.
Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.
Understanding this section
Section 211 sets the agent's basic duty: to conduct the principal's business according to his directions, or in their absence according to the custom of that business in that place. If he departs from this and loss results, he must make it good; if profit results, he must account for it.
The agent's duties
- Follow the principal's directions or, failing them, the custom of the trade (section 211).
- Act with reasonable skill and diligence (section 212).
- Render proper accounts (section 213).
- Communicate with the principal in difficulty (section 214).
- Not deal on his own account without disclosure (sections 215 and 216).
- Pay over sums received (section 218).
Fiduciary character
An agent is a fiduciary. He must not make a secret profit or let his interest conflict with his duty. Any benefit made in breach belongs to the principal.
Common mistakes
- Treating an agent's secret profit as his own.
Read with: Section 212 Indian Contract Act, 1872, Section 215 Indian Contract Act, 1872, Section 216 Indian Contract Act, 1872
Prepared with AI assistance as a study aid. Every ruling listed was checked against the Supreme Court's own judgments on this site, and quoted words appear in those judgments; linked names open the full judgment. Read the judgments themselves before relying on them. Not legal advice.