Delegation by an Agent under Sections 190 to 195 of the Indian Contract Act, 1872: Delegatus Non Potest Delegare and Its Exceptions, Properly and Improperly Appointed Sub-Agents, and the Substituted Agent

A principal chooses his agent, and the law presumes he chose him for a reason. That is the foundation of the maxim delegatus non potest delegare: a delegate cannot delegate. Section 190 states the rule and its two statutory exceptions, and Sections 191 to 195 work out what happens when delegation does take place. The critical distinction is between a sub-agent, who works under the agent and has no relationship with the principal at all, and a substituted agent, who is named by the agent but becomes the principal's own agent. Everything turns on which the appointee is, because it determines who is answerable to whom.

1. The Rule and Its Exceptions

Section 190, Indian Contract Act, 1872

When agent cannot delegate. An agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub-agent may be employed, or the nature of the agency so requires.

The ordinary custom of trade, which is the first statutory exception. A banker, a broker or a forwarding agent customarily employs correspondents, and the principal is taken to have contracted on that footing.
The nature of the agency so requires, the second statutory exception, which covers work that cannot be done by one person alone or that necessarily involves engaging others.
The principal's express or implied consent, which is the clearest case and takes the delegation outside the rule altogether.
Ministerial or purely clerical acts, which involve no discretion or personal skill. An agent authorised to sign a contract must sign it himself; he need not personally post the letter.
Emergency, where delegation becomes necessary to protect the principal from loss, on the principle of Section 189.
Trade usage or the established course of dealing between the parties, which is a particular application of the first exception.

⚠ The maxim protects personal confidence, not convenience

The question under Section 190 is not whether delegation would be efficient but whether the agent expressly or impliedly undertook to act personally. Where the principal selected the agent for his own skill, judgment, professional qualification or trustworthiness, the undertaking is implied and delegation is a breach, however competent the substitute may be. Where the agency is of a routine or commercial character and the identity of the person doing the work is immaterial, no such undertaking arises. The consequences of getting this wrong are set out in Section 193 and are severe for the agent.

The question that decides which the appointee is, and what follows

2. The Sub-Agent

Sections 191 to 193, Indian Contract Act, 1872

191. Sub-agent defined. A sub-agent is a person employed by, and acting under the control of, the original agent in the business of the agency.

192. Representation of principal by sub-agent properly appointed. Where a sub-agent is properly appointed, the principal is, so far as regards third persons, represented by the sub-agent, and is bound by and responsible for his acts, as if he were an agent originally appointed by the principal.

Agent's responsibility for sub-agent. The agent is responsible to the principal for the acts of the sub-agent.

Sub-agent's responsibility. The sub-agent is responsible for his acts to the agent, but not to the principal, except in cases of fraud or wilful wrong.

193. Agent's responsibility for sub-agent appointed without authority. Where an agent, without having authority to do so, has appointed a person to act as a sub-agent, the agent stands towards such person in the relation of a principal to an agent, and is responsible for his acts both to the principal and to third persons; the principal is not represented by or responsible for the acts of the person so employed, nor is that person responsible to the principal.

📖 Calico Printers' Association Ltd. v. Barclays Bank Ltd., (1931) 145 LT 51

Facts: An English company employed a bank to handle the shipment and sale of goods to Beirut. The bank employed a bank in Beirut as sub-agent to hold the goods and to insure them. The sub-agent failed to insure, and the goods were destroyed by fire. The principal sued both the agent bank and the sub-agent bank.

Held: The agent bank was liable to the principal, but the principal had no direct claim against the sub-agent. Wright J stated the general rule: where an agent employs a sub-agent, there is ordinarily no privity of contract between the principal and the sub-agent, and the sub-agent is answerable to the agent who employed him. The agent remains responsible to his principal for the work, whether he does it himself or through another.

Ratio: A properly employed sub-agent is answerable to the agent, not to the principal, and there is no privity between the principal and the sub-agent. The agent's responsibility to the principal for the work is unaffected by the delegation.

2.1 Properly and improperly appointed sub-agents compared

	Properly appointed, Section 192	Improperly appointed, Section 193
Is the principal represented?	Yes, as regards third persons, as if the sub-agent had been appointed by the principal	No. The principal is neither represented by nor responsible for him
Who is answerable to the principal for the sub-agent's acts?	The agent	The agent, and he stands towards the sub-agent as a principal
Is the sub-agent answerable to the principal?	No, except in cases of fraud or wilful wrong	No, not at all
Is the agent answerable to third persons?	Not personally; the principal is bound	Yes. He is responsible for the sub-agent's acts to third persons as well
Is the sub-agent answerable to the agent?	Yes	Yes, as an agent to his principal

The consequences of an improper appointment are therefore borne almost entirely by the agent. He becomes the principal of the person he engaged, he remains liable to his own principal, and he acquires a fresh liability to third persons for acts he did not do. The principal, for his part, escapes entirely: he is not bound by the sub-agent's acts and has no claim against him.

3. The Substituted Agent

Sections 194 and 195, Indian Contract Act, 1872

194. Relation between principal and person duly appointed by agent to act in business of agency. 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.

Illustration (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.

195. Agent's duty in naming such person. 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.

Illustration (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.

📖 De Bussche v. Alt, (1878) 8 Ch D 286 (CA)

Facts: The owner of a ship employed an agent in China to sell it at a stated price. With the owner's consent the agent employed a sub-agent in Japan for the purpose. The Japanese agent, unable to find a buyer at the price, bought the ship himself at that price and shortly afterwards resold it at a substantial profit. The owner sued him directly for the profit.

Held: He was liable to account to the owner. The Court of Appeal held that where an agent, with the principal's authority, names another person to act for the principal, privity is established between the principal and that person, who becomes the principal's own agent and owes him the full fiduciary duties directly. The Court also stated the exceptions to delegatus non potest delegare, including trade custom, the nature of the business, unforeseen emergency, and the principal's express or implied authority.

Ratio: A person named by an agent under the principal's authority becomes a substituted agent, in direct privity with the principal and directly accountable to him. The rule against delegation yields to trade custom, the nature of the business, emergency and the principal's authority.

4. Sub-Agent and Substituted Agent Compared

Point of difference	Sub-agent, Sections 191 to 193	Substituted agent, Sections 194 and 195
How appointed	By the agent, on his own initiative or under a general permission to delegate	By the agent, under an express or implied authority to name a person to act for the principal
Under whose control	The agent's	The principal's
Privity with the principal	None, except in cases of fraud or wilful wrong	Direct privity
Who is answerable to the principal for his acts	The agent	The substituted agent himself
The agent's continuing liability	He remains responsible for the sub-agent's acts	None, provided he exercised the discretion of a man of ordinary prudence in the selection
Who may sue him	The agent	The principal, directly
Remuneration	Paid by the agent	Ordinarily payable by the principal
Illustration	A bank employing a correspondent bank to hold goods, per Calico Printers	A solicitor naming an auctioneer to conduct a sale, per Illustration (a) to Section 194

4.1 How to tell them apart

Ask what the agent was authorised to do. A general permission to delegate produces a sub-agent; an authority to name a person to act for the principal produces a substituted agent. The distinction is in the words of Section 194.
Ask who controls the appointee. Control by the agent points to a sub-agent; control by the principal to a substituted agent.
Ask who pays him. Payment by the agent out of his own remuneration suggests a sub-agent; direct payment by the principal suggests a substituted agent.
Ask whether the agent retains responsibility for the work. If he does, the appointee is a sub-agent; if his responsibility is confined to the care taken in choosing, the appointee is a substituted agent.
The label the parties use is not decisive, and the court looks at the substance of the arrangement.

⚠ Section 195 confines the agent's duty to the selection

This is the practical reason the distinction matters so much to the agent. Where the appointee is a sub-agent, the agent remains answerable to the principal for everything the sub-agent does, however carefully he was chosen. Where the appointee is a substituted agent, Section 195 confines the agent's duty to exercising the discretion of a man of ordinary prudence in the selection, and once he has done that he is not responsible for the substituted agent's acts or negligence at all. Illustration (a) to Section 195 puts it starkly: the merchant who chose a surveyor of good reputation is not liable for the surveyor's negligence, and the principal must sue the surveyor.

5. Consequences of Unauthorised Delegation

The principal is not bound by the acts of the person improperly employed, under Section 193, and may disown the transaction.
The agent is liable to the principal for any loss caused, both under Section 193 and as a breach of his duty to perform personally under Sections 190 and 211.
The agent becomes liable to third persons for the acts of the person he employed, which is an exposure he would not otherwise have.
The person employed has no claim against the principal for remuneration or indemnity, his relationship being with the agent alone.
The principal may nonetheless ratify the unauthorised appointment under Sections 196 to 200, and ratification will convert the position to that of a properly appointed sub-agent.
Third parties may still bind the principal through Section 237 where the principal's own words or conduct induced them to believe the person had authority.

6. The Position Stated Shortly

Section 190 states delegatus non potest delegare: an agent cannot employ another to do what he undertook to do personally.
The statutory exceptions are the ordinary custom of trade and the nature of the agency; the general law adds consent, ministerial acts, emergency and established course of dealing.
Section 191 defines a sub-agent as a person employed by and acting under the control of the agent.
Section 192: a properly appointed sub-agent represents the principal as regards third persons, the agent is answerable to the principal for his acts, and the sub-agent is answerable to the agent and not the principal, except for fraud or wilful wrong.
Calico Printers v. Barclays Bank: there is no privity between principal and sub-agent, and the agent remains responsible for the work.
Section 193: on an unauthorised appointment the agent becomes the principal of the person employed and is liable to his own principal and to third persons, while the principal is neither represented by nor responsible for him.
Section 194: a person named under an express or implied authority to name someone to act for the principal is a substituted agent, in direct privity with the principal.
De Bussche v. Alt: a substituted agent owes the principal the fiduciary duties directly and must account to him.
Section 195 confines the agent's duty to exercising the discretion of a man of ordinary prudence in the selection, after which he is not responsible for the substituted agent's negligence.
Section 210 terminates the sub-agent's authority with that of the agent who appointed him.

7. Related Topics and Provisions

Topic or provision	Connection
Creation of Agency and the Extent of Authority	How authority arises and how far it goes
Duties of the Agent under Sections 211 to 216	The duty to perform personally and with skill
Ratification under Sections 196 to 200	Adoption of an unauthorised appointment
Termination of Agency under Sections 201 to 210	Section 210 and the sub-agent's authority
Sections 190 to 195, Indian Contract Act	Delegation, sub-agents and substituted agents
Section 189, Indian Contract Act	Emergency, as a ground for delegation
Section 237, Indian Contract Act	Holding out, where the principal is bound despite an unauthorised appointment
Section 210, Indian Contract Act	Termination of the sub-agent's authority