Realty Bytes - March 2025

Rights of the agent in a power of attorney

A power of attorney is an instrument by which a person (principal) may assign responsibilities to another person (agent/constituted attorney) to act on their behalf. But what happens to the rights of the agent if the principal dies or decides to revoke such authority? Section 202 of the Indian Contract Act, 1872 (Act) addresses this concern by offering special protection to agents who have a personal stake in the subject matter of their agency such as an interest in the property or transaction in respect of which the agency has been created.

Section 202 prohibits the termination of an agency involving the personal interest of the agent without a written contract between the principal and the agent. Thus, if an agent has a financial or personal interest in the property or transaction that it is managing, the power of attorney remains valid even if the principal dies, unless there is a specific clause in the contract that