Section 186 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 186 is a single line: "The authority of an agent may be expressed or implied." It tells you that an agent does not need a written power from the principal to act; authority can come from what the principal said, or from what can be inferred from the situation. The next section, 187, defines the two words.
The authority of an agent may be expressed or implied (s.186). Authority is express when given by words spoken or written, and implied when inferred from the circumstances of the case (s.187). The section does not require writing and does not limit the principal to one route. A footnote in the source cross-refers to the Registration Act, 1908, s.33, and to the Code of Civil Procedure, 1908, Schedule I, Order III, rule 4, for particular cases. The section prints no illustration.
The text and its footnote
The section reads: "The authority of an agent may be expressed or implied."
The source adds footnote 1, which says: "See, however, the Registration Act, 1908 (16 of 1908), s. 33; see also the Code of Civil Procedure, 1908 (5 of 1908), Sch. I, Order III, rule 4." The footnote does not set out those provisions, and this article does not describe them. Its message is simply that, for some purposes, other laws speak about how an agent's authority must be shown; the source does not say more. If your matter involves one of those settings, read the other law, or take advice, before relying only on section 186.
What "authority" means here
An agent, as section 182 says, is a person employed to do an act for another or to represent another in dealings with third persons. "Authority" is the power given to the agent to do that. The whole structure of the chapter turns on it: the principal is bound by what the agent does within authority; sections 188 and 189 say how far authority extends; sections 196 and onwards say what happens when an agent goes beyond it. Our article on section 182 explains who is an agent.
If you are putting an agency into place for your business, an agreement drafting adviser can help you decide how much to write down and how to describe the agent's powers.
Two routes to authority
| Route | How it arises (section 187) | Typical form |
|---|---|---|
| Express | Given by words spoken or written | An appointment letter, a written mandate, an email, an oral instruction |
| Implied | Inferred from the circumstances of the case, including things spoken or written and the ordinary course of dealing | A manager who has long been ordering stock in the owner's name with the owner's knowledge |
Section 186 does not rank the two. It says authority "may be" either. That means a principal cannot always say "I never gave it in writing" if the circumstances, including the ordinary course of dealing, point to authority. It also means an agent cannot claim implied authority merely because he would find it convenient: the authority must be inferable from the circumstances.
What section 186 does not say
Reading the text carefully, you will notice that it does not:
- require that authority be in writing;
- say that authority must come from a formal document called a power of attorney;
- say what the extent of the authority is (see section 188);
- say what happens when the principal is not aware of what the agent does;
- deal with ratification (sections 196 onwards).
The Powers-of-Attorney Act and other statutes on authorised signatories are outside this article. The footnote shows only that other laws exist on the point.
A modern example (ours, not the Act's)
Ishaan runs a small property brokerage in Pune. He gives his associate Ritu a signed letter authorising her to show his client Mr. Rao's flat, to collect enquiries and to quote the asking price stated in the letter. Her authority is express: it is "given by words ... written".
Separately, for three years Ritu has also been receiving token amounts from interested buyers and issuing Ishaan's standard receipts, with Ishaan's knowledge and without objection. Nobody wrote that she may receive tokens. The authority to do so may be inferred from the circumstances of the case, including the ordinary course of dealing, which section 187 says may be accounted circumstances. That is implied authority. Whether the facts really support the inference is a matter for each case.
What can the parties change?
Section 186 itself is general, but it leaves room for choice: principal and agent can choose to give authority expressly and set limits. A careful principal can write that the agent may do X and may not do Y. That does not erase the possibility of implied authority in other matters, because section 187 allows authority to be inferred from circumstances. A written clause may be strong evidence of what the principal intended, but the text of the section does not say it excludes implication. The cautious approach is to say clearly in writing both what is permitted and what is not.
Practical points
- Principals: put limits in writing, and avoid letting a pattern of unwritten dealing grow beyond what you intend.
- Agents: carry written authority for significant acts, and ask for confirmation if the principal's wishes are unclear.
- Third persons: ask to see the authority for a large or unusual transaction; the section means authority can be written or inferred, so look at both.
- Check other laws: for registration and court appearances, the footnote's cross-references show that other provisions may apply.
Need help setting out an agent's authority?
Our agreement drafting service can help you write an appointment that states what your agent may and may not do, so that disputes about authority do not turn on memory. Other laws may also apply to registration or court work.
Key takeaways
- An agent's authority may be expressed or implied (s.186).
- Express authority is given by words spoken or written; implied authority is inferred from circumstances (s.187).
- The section does not require writing.
- A footnote points to the Registration Act, 1908, s.33 and the Code of Civil Procedure, 1908, Schedule I, Order III, rule 4 for particular cases.
- The extent of authority is dealt with in later sections, starting with section 188.
Read next
- Section 187: express and implied authority defined
- Section 188: extent of agent's authority
- Specimen agency contract: format and key provisions
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.