Sub-Agent under Indian Contract Act
Introduction
A sub-agent plays an important role in agency law when an agent delegates his duties to another person. The Indian Contract Act, 1872 recognises sub-agency but limits such delegation. Understanding sub-agents helps in determining liability and relationships between parties.
Meaning / Definition
A sub-agent is a person employed by and acting under the control of the original agent in the business of the agency (Section 191, Indian Contract Act, 1872).
As a general rule, an agent cannot delegate his authority to another person. This rule is based on the principle “Delegatus Non Potest Delegare”, which means a delegate cannot further delegate.
Modes or Types
Sub-Agent under Proper Appointment
A sub-agent is properly appointed when:
- The principal permits delegation; or
- It is allowed by custom of trade; or
- It is necessary for the work
Legal position:
- Agent is responsible to the principal for acts of sub-agent
- Sub-agent is responsible to the agent
- Principal is indirectly bound by acts of sub-agent
Sub-Agent without Authority
When a sub-agent is appointed without authority:
- Principal is not bound by acts of sub-agent
- Sub-agent is not responsible to the principal
- Agent becomes personally responsible for acts of sub-agent
Distinction / Comparison
Sub-Agent vs Substituted Agent
| Basis | Sub-Agent | Substituted Agent |
|---|---|---|
| Definition | Works under control of agent | Appointed to act directly for principal |
| Control | Controlled by agent | Controlled by principal |
| Responsibility | Responsible to agent | Responsible to principal |
| Liability | Agent liable for acts | Agent not liable for acts |
| Contract relation | No direct contract with principal | Direct contract with principal |
Agent vs Servant
| Basis | Agent | Servant |
|---|---|---|
| Authority | Can create legal relations with third parties | Usually cannot create such relations |
| Work | May work for multiple principals | Works for one employer |
| Payment | Gets commission | Gets salary or wages |
| Control | Works with some independence | Works under direct control |
| Role | Represents principal | Performs tasks for employer |
Practical Example
A appoints B to sell goods. B appoints C to assist in selling. If A allowed such delegation, C is a sub-agent. B remains responsible for C’s actions. If B appoints C without permission, A is not bound by C’s acts, and B is personally liable.
Summary
- A sub-agent works under the control of the original agent (Sec. 191)
- General rule: agent cannot delegate authority (delegatus non potest delegare)
- Proper appointment binds the principal indirectly
- Unauthorized appointment does not bind the principal
- Sub-agent differs from substituted agent in control and liability
- Agent has more authority than a servant in legal dealings