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CMA Intermediate · Business Laws and Ethics · Special Contracts - Indemnity and Guarantee; Bailment and Pledge; Laws of Agency

Under the Indian Contract Act, 1872, where an agent holding express or implied authority to name another person to act for the principal in the business of the agency has named such a person accordingly, that person is:

Such a person is an agent of the principal, not a sub-agent, for the part of the business entrusted to him. Section 194 gives this result where the agent had express or implied authority to name another person to act for the principal.

  1. AA sub-agent of the agent, answerable only to the agent
  2. BAn agent of the principal for the part of the business entrusted to himCorrect
  3. CA servant of the agent with no privity to the principal
  4. DA co-surety with the original agent

Explanation

Section 194 provides that a person named by an agent who has authority to name someone is not a sub-agent but an agent of the principal for the part of the business entrusted to him. The option calling him a sub-agent describes the position when the agent appoints without such authority, which is a different case.

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