Section 194 - Relation between principal and person duly appointed
by agent to act in business of agency, Section 195 - Agent's duty in
naming such person : Indian Contract Act
What is the Relation between principal and person duly appointed by
agent to act in business of agency? What is Agent's duty in naming
such person? Section 194 and 195 of Indian Contract Act
Section 194 of Indian Contract Act 1872 : "Relation between
principal and person duly appointed by agent to act in business of
194. Where an agent, holding an express or implied authority
to name another person to act for the principal in the business
of the agency, has named another person accordingly, such person
is not a sub-agent, but an agent of the principal for such part
of the business of the agency as is entrusted to him.
(a) 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. C is not a sub-agent, but is
A's agent for the conduct of the sale.
(b) A authorizes B, a merchant in Calcutta, to recover the
moneys due to A from C & Co. B instructs D, a solicitor, to take
legal proceedings against C & Co. for the recovery of the money.
D is not a sub-agent, but is solicitor for A.
Section 195 of Indian Contract Act 1872 : "Agent's
duty in naming such person"
195. In selecting such agent for his principal, an agent is
bound to exercise the same amount of discretion as a man of
ordinary prudence would exercise in his own case; and, if he
does this, he is not responsible to the principal for the acts
or negligence of the agent so selected.
(a) A instructs B, a merchant, to buy a ship for him. B employs
a ship surveyor of good reputation to choose a ship for A. The
surveyor makes the choice negligently and the ship turns out to
be unseaworthy and is lost. B is not, but the surveyor is,
responsible to A.
(b) A consigns goods to B, a merchant, for sale. B, in due
course, employs an auctioneer in good credit to sell the goods
of A, and allows the auctioneer to receive the proceeds of the
sale. The auctioneer afterwards becomes insolvent without having
accounted for the proceeds. B is not responsible to A for the