Sections 192 and 193 of the Indian Contract Act, 1872: Sub-Agent Liability Explained
Sections 192 and 193 form part of Chapter X on agency and explain the legal consequences of appointing a sub-agent. The key distinction is whether the sub-agent has been properly appointed under the law of agency or has been appointed by an agent without authority.
The Indian Contract Act, 1872 is Act No. 9 of 1872. In the agency provisions, Section 191 defines a sub-agent as a person employed by, and acting under the control of, the original agent in the business of the agency. Section 190 states the general rule against delegation by an agent, subject to the exceptions recognized by that section. Sections 192 and 193 then determine responsibility when a sub-agent is used.
Section 192: Representation of principal by sub-agent properly appointed
Section 192 provides, in substance, that: where a sub-agent is properly appointed, the principal is represented by that sub-agent in relation to third persons and is bound by and responsible for the sub-agent's acts as if the sub-agent had originally been appointed by the principal.
The agent remains responsible to the principal for the acts of the sub-agent. The sub-agent is responsible for his acts to the agent and ordinarily not directly to the principal, except in cases of fraud or wilful wrong.
Meaning and effect of Section 192
A properly appointed sub-agent creates a legally recognized chain of responsibility. For dealings with third persons, the sub-agent can represent the principal. At the same time, the original agent remains accountable to the principal for the sub-agent's acts. The sub-agent's primary responsibility is to the original agent, subject to the statutory exception for fraud or wilful wrong.
Section 193: Agent's responsibility for sub-agent appointed without authority
Section 193 provides, in substance, that: when an agent appoints a person as a sub-agent without authority, the agent stands towards that person as a principal stands towards an agent and is responsible for that person's acts both to the principal and to third persons.
In such a case, the principal is neither represented by nor responsible for the acts of the person so employed, and that person is not responsible to the principal under Section 193.
Meaning and effect of Section 193
Section 193 places the consequences of an unauthorized appointment on the original agent. Because the appointment was not authorized, the person employed does not acquire the same representative relationship with the principal that exists when a sub-agent is properly appointed under Section 192.
Difference between Sections 192 and 193
| Point | Section 192 | Section 193 |
|---|---|---|
| Appointment | Sub-agent is properly appointed. | Agent appoints a sub-agent without authority. |
| Principal and third persons | Principal is represented by the sub-agent and may be bound by the sub-agent's acts. | Principal is not represented by or responsible for the acts of the person employed. |
| Original agent | Agent is responsible to the principal for the acts of the sub-agent. | Agent is responsible for the acts of the person employed both to the principal and to third persons. |
| Sub-agent and principal | Sub-agent is generally responsible to the agent, not the principal, except for fraud or wilful wrong. | The person employed is not responsible to the principal under Section 193. |
How Sections 190 to 193 work together
To understand whether Section 192 or Section 193 applies, the starting point is the agent's power to delegate. Sections 190 and 191 explain when an agent may employ another person and define a sub-agent. If the appointment is legally proper, Section 192 governs the resulting responsibilities. If the agent had no authority to make the appointment, Section 193 governs the consequences.
Related provisions on agency
For the surrounding statutory scheme, see Sections 186 and 187 on express and implied authority, Sections 188 and 189 on extent of authority and emergencies, and Sections 194 and 195 on a person duly appointed by an agent and the agent's duty in naming that person.