Section 194 The Indian Contract Act, 1872
📜 Section 194 – The Indian Contract Act, 1872
Agent’s authority in appointing a sub-agent
"Where an agent holding an express or implied authority to name another person to act for the principal, 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."
✅ Explanation:
This section explains the situation where an agent appoints another person to act on behalf of the principal, not as a sub-agent, but directly as the agent of the principal.
This only applies when:
The original agent has clear authority (either express or implied) to appoint another person.
The person appointed becomes directly responsible to the principal for that specific work.
🔍 Key Difference: Agent vs. Sub-agent:
| Type | Appointed by | Acts on behalf of | Relationship |
|---|---|---|---|
| Agent (under Sec 194) | Agent (authorized) | Principal | Direct |
| Sub-agent (Sec 190-193) | Agent (delegated) | Principal (indirectly) | Indirect |
🧾 Illustration:
A, an agent for a business owner P, is given authority to appoint a customs clearing agent. A appoints B to handle this.
➡️ B is not a sub-agent, but becomes an agent of P directly for the customs work.
🔐 Practical Use:
Applies commonly in logistics, legal representation, financial dealings, etc., where:
An agent is authorized to appoint professionals (e.g., chartered accountants, clearing agents, brokers) to act for the principal.
⚖️ Related Sections:
Section 190: When an agent may delegate
Section 195: Agent’s duty in naming such person
RELATED Blog
0 comments