What do you mean by sub-agent? When can a sub-agent be employed? Illustrate your answer.

Question: What do you mean by sub-agent? When can a sub-agent be employed? Illustrate your answer.

Find the answer to the mains question of the Law of Contract only on Legal Bites. [What do you mean by sub-agent? When can a sub-agent be employed? Illustrate your answer.]

Answer

Delegatus non potest delegare means a delegate cannot further delegate. Sub Agent is appointed and works under the control of Agent, ordinarily, Agent has no power to delegate the works which have been given (delegated) to him by Principal: Section 190 prohibits Agent to appoint sub Agent.

However, under certain exceptional circumstances, an Agent has the power to appoint a sub-agent and delegate his power to a sub-agent. As Section 190 provides that:

An agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub-agent may, or, from the nature of the agency, a sub-agent must, be employed.

According to Section 191- A "Sub-agent" is a person employed by, and acting under the control of, the original agent in the business of the agency. Thus Sub Agent is appointed by the original agent and works under the control of the original agent. In following exceptional circumstances the sub-agent can be appointed by the original Agent.

(i) Nature of work

(ii) Custom of trade

(iii) Ministerial work

(iv) Unforeseen emergencies

(v) Authorised by the principal

The sub-agent acts on behalf of the agent, who is responsible for the actions and liabilities of the sub-agent within the scope of the agency.

According to the Indian Contract Act, a sub-agent can be employed under the following circumstances:

Authority granted by the Principal: The principal (the person who appoints the agent) must expressly or impliedly grant authority to the agent to employ a sub-agent. The agent cannot appoint a sub-agent unless authorized by the principal.

Custom or trade usage: It is common in certain trades or customs for agents to employ sub-agents. If such a trade or custom exists and it is known to the parties, an agent may employ a sub-agent without express authorization from the principal.

Necessity or custom of the trade: When the agent is unable to perform their duties due to illness, absence, or any other reason, they may appoint a sub-agent as a necessary or customary measure to ensure the performance of the agency.

The relationship between the agent, sub-agent, and the principal is governed by the provisions of the Indian Contract Act. The agent remains responsible to the principal for the actions and liabilities of the sub-agent within the scope of the agency. The sub-agent, in turn, owes duties to both the agent and the principal.

It's important to note that the appointment of a sub-agent does not absolve the agent from their responsibilities towards the principal. The agent must exercise due diligence and ensure that the sub-agent acts in accordance with the instructions and authority granted by the principal. Any acts or omissions by the sub-agent that result in a breach of the agency may hold both the agent and the sub-agent liable to the principal.

Therefore, employing a sub-agent requires proper authorization from the principal or must be supported by trade customs or necessity, and the agent remains accountable for the actions of the sub-agent as per the Indian Contract Act.

Effects of appointment of Sub Agent- Substituted Agent Meaning [Section 194]- The meaning of substituted agent has been defined u/s 194 of the Indian Contract Act. Section 194 provides that where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub-agent, but an agent of the principal for such part of the business of the agency as is entrusted to him.

Examples:

(a) A directs B, his solicitor, to sell his estate by auction, and to employ an auctioneer for the purpose. B names C, an auctioneer, to conduct the sale. C is not a sub-agent but is A's agent for the conduct of the sale.

(b) A authorizes B, a merchant in Calcutta, to recover the money due to A from C & Co. B instructs D, a solicitor, to take legal proceedings against C & Co. for the recovery of the money D is not a sub-agent, but is the solicitor for A.

Thus regarding substituted agents following points are notable work:

(i) Substituted agent is appointed by an original agent.

(ii) Original agent can appoint a substituted agent when he has the authority to appoint a substituted agent with the principal.

(iii) Substituted agent work under the direct control of the Principal.