When the authority given to an agent cannot be revoked, it is said to be an irrevocable agency. An agency becomes irrevocable in the following cases:
1. Where the agency is coupled with interest (Sec. 202):
Where the agent has himself an interest in the subject-matter of agency, the agency is said to be coupled with interest. Such an agency is created with the object of protecting or securing any interest of the agent.
ADVERTISEMENTS:
So where a creditor is employed for valuable consideration as an agent to collect rents due to the principal (debtor) for adjusting the amount towards his debt, the principal thereby confers an interest on the agent and the authority cannot be revoked unilaterally during the subsistence of the interest, in the absence of an express contract to the contrary.
It is important that the doctrine of agency coupled with interest applies only, if the authority was intended for the protection of an interest of the agent existing at the time of the creation of the agency and it is not sufficient that it does so incidentally. It, therefore, cannot apply where the interest arises after the creation of the agency.
It must also be noted that an agency coupled with interest is not terminated even by the death, insanity or insolvency of the principal.
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ADVERTISEMENTS:
Illustration (Appended To Sec. 202):
A gives authority to B to sell A’s land and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.
2. When revocation would cause the agent personal loss:
Where the agent has, in pursuance of his authority, contracted a personal liability, the agency becomes irrevocable and the principal cannot revoke the authority unilaterally. This is so because the principal cannot be permitted to defeat rights already established.
ADVERTISEMENTS:
Illustration:
A gives authority to B to pay A’s creditor C and places the necessary money in the hands of B for that purpose. Thereupon B informs C that he has received money in his hands for payment of his debt and that C may collect the same any time from him. A cannot revoke B’s authority to pay to C as B has incurred a personal liability.
3. When the authority has been partly exercised by the agent (Sec. 204):
Where the agent has partly exercised his authority, it becomes irrevocable so far as regards such acts and obligations as “arise from acts already done in the agency.
Illustration (Appended To Sec. 204):
A authorises B to buy 1,000 bales of cotton on account of A, and to pay for it out of A’s money remaining in B’s hands. B buys 1.000 bales of cotton in A’s name and so as not to render him personally liable for the price. A cannot revoke B’s authority so far as regards buying the cotton but can revoke B’s authority to pay for the cotton.