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

Desai, a solicitor, is authorised by his client Iyer to sell Iyer's estate by auction and to employ an auctioneer. Desai names Joshi, an auctioneer, to conduct the sale. What is Joshi's legal position?

Joshi is Iyer's agent for conducting the sale, not Desai's sub-agent. Section 194 says that when an agent has authority to name another person to act for the principal and does so, the person named is an agent of the principal for that part of the business.

  1. AA sub-agent of Desai
  2. BAn agent of Iyer for the conduct of the saleCorrect
  3. CA substituted agent answerable only to Desai
  4. DAn agent of neither Desai nor Iyer

Explanation

Under Section 194, where an agent with express or implied authority to name another person to act for the principal names someone, that person is not a sub-agent but an agent of the principal for the part of the business entrusted to him. Illustration (a) is nearly identical. Calling Joshi a sub-agent of Desai therefore fails.

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