Sections 213 and 214 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.
Two short sections add two practical duties to those in sections 211 and 212. Section 213 requires an agent to render proper accounts to his principal on demand. Section 214 requires him, in cases of difficulty, to use all reasonable diligence in communicating with the principal and in seeking his instructions.
An agent is bound to render proper accounts to his principal on demand (s.213). In cases of difficulty, it is the agent's duty to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions (s.214). Neither section prints an illustration, and neither says what form accounts must take or how quickly an answer must come.
Section 213: proper accounts on demand
The text: "An agent is bound to render proper accounts to his principal on demand."
Three points arise from the words.
- "Proper" accounts. The section does not describe the form. It asks for proper accounts, which the facts of the agency will shape: sales made, money received, expenses incurred, commission claimed.
- "On demand". The principal must ask. The section does not say the agent must send accounts unprompted at fixed intervals, though a contract can require that.
- "To his principal". The duty is owed to the principal.
Accounts connect to other sections. Section 217 allows the agent to retain out of sums received for the principal what is due to him for advances, expenses and remuneration, and section 218 requires him to pay over the remainder; accounts are how the principal checks the figures. Section 216 allows the principal to claim benefits gained by the agent dealing on his own account; our article on sections 215 and 216 explains.
Section 214: communicating in cases of difficulty
The text: "It is the duty of an agent, in cases of difficulty, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions."
| Element | Words |
|---|---|
| Trigger | "in cases of difficulty" |
| Duty | "to use all reasonable diligence in communicating with his principal" |
| Second part | "and in seeking to obtain his instructions" |
The section does not define "difficulty". It also does not require the agent to wait indefinitely: it speaks of "all reasonable diligence". Compare section 189, where in an emergency an agent has authority to act to protect the principal from loss as a person of ordinary prudence would; see our article on sections 189 and 190. Together they make a pair: try to reach the principal and get instructions; where there is an emergency, protect him.
If you need your agents to report regularly and escalate problems, a service agreement can set the reporting rhythm and the escalation steps.
A modern example (ours, not the Act's)
Thakur Foods engages Bhavesh as its distributor in Bhopal. After three months Thakur asks, by email, for an account of the stock received, the sales made, the money collected and Bhavesh's expenses. Under section 213, Bhavesh is bound to render proper accounts on demand. If he sends only a total with no breakdown, Thakur may say the accounts are not "proper", though the section does not describe the form; a contract that lists the statements to be sent removes the doubt.
A month later a retailer disputes the quality of a lot and offers to settle on terms Bhavesh was not told he may accept. This is a case of difficulty. Under section 214, Bhavesh should use all reasonable diligence in communicating with Thakur and in seeking instructions: call, email and record the attempts, rather than settle on his own or ignore the matter.
Why the two duties go together
Accounts look backwards: they show what the agent has done with the principal's business and money. The duty to communicate looks forwards: it makes sure the principal can steer the agency when something unexpected happens. An agent who keeps good records but never reports a difficulty, or who reports every difficulty but cannot account for the money, has met only one of the two duties. Both sections use the idea of reasonableness or propriety rather than fixed rules, so the details are left to the nature of the agency and to the written terms.
What can the parties change?
The sections do not mention contrary agreement. In practice a contract can fix the content and timing of accounts (monthly statements, an annual statement, access to books) and can say who in the principal's business receives communications and how fast the agent should expect an answer. It can also fix what counts as a case of difficulty requiring a call. What a contract cannot do, on the words of the sections, is remove the agent's duty altogether without clear language; this article does not go beyond the text.
Practical points
- Principals: ask for accounts in writing and keep a copy of the request; section 213 operates "on demand".
- Agents: keep a running record of receipts, payments and expenses so that proper accounts can be rendered quickly.
- In difficulty: write down what you tried and when, to show reasonable diligence.
- Contracts: state the format and frequency of accounts and who must be contacted.
Need help setting out reporting duties?
Our service agreement drafting service can help you spell out the accounts an agent must keep and send, and the steps he must take when a problem arises. Other laws may also apply to books and records in your sector.
Key takeaways
- An agent must render proper accounts to his principal on demand (s.213).
- In cases of difficulty he must use all reasonable diligence in communicating with the principal and in seeking his instructions (s.214).
- The sections do not describe the form of accounts or define difficulty.
- A written agency contract can fill in the detail.
Read next
- Section 212: skill and diligence required from agent
- Sections 215 and 216: agent dealing on own account
- Agency: sections 182 to 238
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.