Indian Contract Act, 1872 · Chapter X: Agency · Effect of agency on contracts with third persons
Section 227: Principal how far bound, when agent exceeds authority
In plain words
If an agent exceeds their authority and the authorised part can be separated from the rest, only the authorised part binds the principal as between them.
Example: A authorises B to insure A's ship for 4,000 rupees. B insures both the ship and the cargo. A must pay the premium for the ship's policy only.
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.
Official text
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.
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.
Supreme Court judgments citing the section 227
No Supreme Court judgment in our database cites this section yet.