Who is Substituted Agent. Distinguish between sub-agent and substituted agent.

Substituted Agent : In some cases, principal asks agent to appoint another person to do some work (which is normally not done by the agent). In such case, the another person appointed by agent is not sub-agent, but is agent of the principal itself. For convenience, such person may be called Substituted Agent. Section 194 deals with this matter. It states when 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.

Example :  A directs B, his solicitor, to sell estate by auction and to employ an auctioneer for the purpose. B names C, an auctioneer, to conduct the sale. C is not sub -agent but is A’s agent for the conduct of the sale.

Distinction between Sub-Agent and Substituted Agent : Both sub-agent and substituted agent are appointed by the agent however,
there are the following points of difference between the two:

  1. Appointment : A sub-agent is appointed by the agent. But a Substituted agent may be appointed by agent or principal.
  2. Responsibility : A sub-agent is responsible to the original agent. But the substituted agent is responsible to the principal for all his acts.
  3. Direction and control : A sub-agent works under the control of the agent but a substituted agent works under the control of the principal.
  4. Privity of contract : After the appointment of substituted agent a privity of contract is established between the principal and the substituted agent, hence both can sue each other. But there is no Privity of contract between the principal and the sub-agent.
  5. Liability : The agent is responsible to the principal for the acts of the sub-agent but he is not liable for the acts of the substituted agent, provided he has taken due care in selecting him.

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