Page 121 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes 3. the nature of agency is such that it cannot be accomplished without the appointment of a
sub-agent;
4. where the nature of the job assigned to the agent is purely clerical and does not involve
the exercise of discretion, e.g., if Anthony is appointed to type certain papers, because of
lack of time, he assigns the job to another equally competent typist Bharat, the delegation
is valid;

5. in an unforeseen emergency.
Under the above-mentioned circumstances stipulated by S.190, if agent appoints another person
in the matter of the agency, that other person may assume the position of either a sub-agent
or a substituted agent. Section 191 states that a sub-agent is a person employed by and acting
under the control of the original agent in the business of agency. Since the sub-agent is appointed
by the act and under the control of the agent, there is no privity of contract between the sub-
agent and the principal. The sub-agent, therefore, cannot sue the principal for remuneration
and, similarly the principal cannot sue the sub-agent for any moneys due from him. Each of
them can proceed against his immediate contracting party, viz., the agent except where the
sub-agent is guilty of fraud. In that case, the principal has a concurrent right to proceed against
the agent and the sub-agent. A sub-agent properly appointed, however, can represent the
principal and bind him for his acts as if he were agent originally appointed by the principal. But
where agent, without having the authority to do so, has appointed a sub-agent, the principal is
not represented by or responsible for the acts of such a sub-agent. The sub-agent can only bind
the agent by contracts entered into with third parties.
Where agent appoints or names another person for being appointed as agent in his place, such
person is called a substituted agent (S.194).

Examples:
1. Amar directs Bharat, his solicitor, to sell his estate by auction and to employ an auctioneer
for the purpose. Bharat names Cooper, an auctioneer, to conduct the sale. Cooper is not a
sub-agent, but is Amar’s agent for the conduct of the sale.
2. Amar authorises Bharat, a merchant in Calcutta, to recover the money due to Amar from
Cooper and Co. Bharat instructs Dalip, a solicitor to take proceedings against Cooper and
Co. for the recovery of the money. Dalip is not a sub-agent but is a solicitor for Amar.

12.4 Duties and Rights of Agent

Duties of Agent

The duties of agent towards his principal are:
1. To conduct the business of agency according to the principal’s directions (S.211): The duty
of the agent must be literally complied with, i.e., the agent is not supposed to deviate
from the directions of the principal even for the principal’s benefit. If he does so, any loss

occasioned thereby shall have to be borne by the agent, whereas any surplus must be
accounted for to the principal.

Examples: (i) Anil is directed by his principal to warehouse the goods at a
particular warehouse. He warehouses a portion of the goods at another place, equally

good but cheaper. The goods are destroyed by fire. Anil, the agent, is liable to make good
the loss.

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