Sections 215 and 216 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.
An agent who is supposed to act for his principal may be tempted to deal for himself in the same business. Section 215 deals with the case where he does so without first obtaining the principal's consent and acquainting him with all material circumstances: the principal may repudiate the transaction in two situations. Section 216 deals with the case where the agent deals on his own account without the principal's knowledge: the principal may claim any benefit that resulted.
If an agent deals on his own account in the business of the agency, without first obtaining the principal's consent and acquainting him with all material circumstances known to the agent, the principal may repudiate the transaction if the case shows either that a material fact was dishonestly concealed from him or that the agent's dealings were disadvantageous to him (s.215). If the agent deals on his own account without the principal's knowledge, the principal may claim from the agent any benefit that resulted (s.216).
Section 215: the principal may repudiate
The text: "If an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows, either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him."
The structure has a condition and a two-way test.
| Part | Words |
|---|---|
| Condition | The agent deals on his own account in the business of the agency, without first (a) obtaining the principal's consent and (b) acquainting him with all material circumstances which have come to the agent's knowledge |
| Test (either one) | A material fact has been dishonestly concealed from the principal by the agent; or the dealings of the agent have been disadvantageous to the principal |
| Result | The principal may repudiate the transaction |
Note that both parts of the condition (consent and disclosure) must have been missing for the condition to be met on the words "without first obtaining the consent ... and acquainting him". And the principal's right to repudiate arises only "if the case shows" one of the two matters. Merely dealing on own account does not by itself give the right on this section's words.
The Act's illustrations (s.215).
(a) A directs B to sell A's estate. B buys the estate for himself in the name of C. A, on discovering that B has bought the estate for himself, may repudiate the sale, if he can show that B has dishonestly concealed any material fact, or that the sale has been disadvantageous to him.
(b) A directs B to sell A's estate. B, on looking over the estate before selling it, finds a mine on the estate which is unknown to A. B informs A that he wishes to buy the estate for himself, but conceals the discovery of the mine. A allows B to buy, in ignorance of the existence of the mine. A, on discovering that B knew of the mine at the time he bought the estate, may either repudiate or adopt the sale at his option.
Illustration (b) is instructive: B told A he wanted to buy, so A gave consent, but B concealed the mine, a material fact. Consent without all the material circumstances is not enough, and A may repudiate or adopt.
If you are appointing someone to sell or buy for you and want them to disclose any personal interest, a legal notice drafting adviser can help you if a repudiation notice becomes necessary.
Section 216: the principal may claim the benefit
The text: "If an agent, without the knowledge of his principal, deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction."
The Act's illustration (s.216). A directs B, his agent, to buy a certain house for him. B tells A it cannot be bought, and buys the house for himself. A may, on discovering that B has bought the house, compel him to sell it to A at the price he gave for it.
Notice the differences between the two sections.
| Point | Section 215 | Section 216 |
|---|---|---|
| Fact | Agent deals on own account without consent and full disclosure | Agent deals on own account "without the knowledge of his principal", "instead of on account of his principal" |
| Principal's remedy | May repudiate the transaction, if dishonest concealment or disadvantage is shown | Entitled to claim from the agent any benefit resulting to him |
| Extra condition | Must show concealment or disadvantage | None stated in the section |
The two sections do not say whether a principal may use both for the same transaction; the text speaks of each remedy separately.
A modern example (ours, not the Act's)
Anand Mehta instructs Pooja, a property broker in Gurugram, to find a buyer for his flat. Pooja quietly buys the flat through her brother, telling Anand nothing of the prospect of a new road that she knows will raise values. She dealt on her own account in the business of the agency, without his consent and without telling him the material circumstance. Under section 215, if the case shows that a material fact was dishonestly concealed, or that the dealing was disadvantageous to Anand, he may repudiate the transaction.
In a different case, Anand tells another broker, Wasim, to buy a shop for him. Wasim reports that the shop cannot be bought and buys it for himself. As in the Act's illustration under section 216, Anand, on discovering this, is entitled to claim from Wasim the benefit, and the Act's illustration shows that he can compel Wasim to sell the shop to him at the price Wasim paid.
What the agent may keep out of money he receives for the principal is a different question, dealt with in sections 217 to 221.
What can the parties change?
Both sections turn on the principal's consent and knowledge, so the principal can allow the agent to deal on his own account, in which case the first condition of section 215 is not met if consent and full disclosure are given. A contract can set out in advance when and how an agent may deal for himself, what he must disclose, and what happens if he does not. The sections themselves are silent on a contract clause that permits an agent to keep any profit without disclosure; this article does not go beyond the text, and such a clause should be read carefully.
Practical points
- Principals: state in the agency contract whether the agent may deal for himself, and require disclosure of any interest.
- Agents: if you want to buy or sell for yourself in the agency's business, get consent and disclose everything material, in writing.
- If you discover self-dealing: act promptly; for section 215 you must show dishonest concealment of a material fact or disadvantage.
- Section 211 says an agent who acts otherwise than as directed must account for profit; see our article on section 211.
Need help after discovering self-dealing by an agent?
If you believe an agent has dealt for himself behind your back, our legal notice drafting service can help you prepare a notice that sets out the facts and the remedies under sections 215 and 216. Other laws may also apply.
Key takeaways
- An agent who deals on his own account in the business of the agency without first obtaining the principal's consent and acquainting him with all material circumstances may have the transaction repudiated by the principal, if a material fact was dishonestly concealed or the dealings were disadvantageous to him (s.215).
- An agent who deals on his own account without the principal's knowledge must yield any benefit resulting to him to the principal (s.216).
- The Act's illustrations: an agent who buys the estate he was told to sell, concealing a mine; an agent who says a house cannot be bought and buys it himself.
Read next
- Section 211: agent's duty in conducting principal's business
- Sections 217 to 221: agent's retainer, remuneration, misconduct and lien
- 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.