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

Kiran, a solicitor, is authorised by his client Anil to sell Anil's estate by auction and to employ an auctioneer for it. Kiran names Chetan, an auctioneer, to conduct the sale. What is Chetan's legal position under the Indian Contract Act, 1872?

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

  1. AA sub-agent of Kiran only, with no link to Anil
  2. BAn agent of Anil for the conduct of the saleCorrect
  3. CA sub-agent of Anil, responsible only to Kiran
  4. DA stranger to the agency with no authority

Explanation

Where an agent holding express or implied authority to name another person to act for the principal names such a person, that person is not a sub-agent but an agent of the principal for the part of business entrusted to him (Section 194). Kiran was expressly authorised to employ an auctioneer, so Chetan is Anil's agent for the sale. Calling him a sub-agent ignores this rule.

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