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CMA Foundation · Fundamentals of Business Laws and Business Communication · Meaning of Indemnity, Guarantee, Pledge, Agent

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. Under the Indian Contract Act, 1872, what is C's legal position?

C is A's agent for the conduct of the sale and not a sub-agent. Because B had authority to name an auctioneer for the principal, the person so named becomes the principal's own agent for the part of the business entrusted to him.

  1. AC is B's sub-agent only and answerable only to B
  2. BC is A's agent for the conduct of the sale, not a sub-agentCorrect
  3. CC is a stranger with no legal relation to A
  4. DC is a surety for B's performance

Explanation

Where an agent holding express or implied authority to name another person to act for the principal in the business of the agency names such a person, that person is not a sub-agent but an agent of the principal for the part of the business entrusted to him. A authorised B to employ an auctioneer, so C is A's agent for the sale. Calling C a sub-agent ignores this rule.

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