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Section 192: Representation of principal by sub-agent properly appointed

Indian Contract Act • Official Statutory Text & Practice Guide

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Act 1872
Section 191 All 266 Sections of Indian Contract Act Section 193

Legal Commentary & Landmark Judgments: Section 192

Section 192 regulates the legal consequences of properly appointing a sub-agent, providing that the principal is bound by the sub-agent's acts toward third parties, the original agent is responsible to the principal for the sub-agent's acts, and the sub-agent is responsible only to the agent, except in cases of fraud or wilful wrong.

  • Representation of Principal as to Third Parties: Where a sub-agent is properly appointed within authorized trade custom or necessity, the principal is fully represented by the sub-agent and bound by his acts toward third parties as if the sub-agent were originally appointed by the principal.
  • Intermediate Agent's Vicarious Responsibility to Principal: The original agent remains strictly answerable and responsible to the principal for all acts, defaults, and negligences of the properly appointed sub-agent.
  • Absence of Privity and the Fraud Exception: The sub-agent is not responsible to the principal, and the principal cannot sue the sub-agent for mere breach of duty or negligence; EXCEPT that in cases of fraud or wilful wrong, direct privity is bypassed and the principal may sue the sub-agent directly.
Key Landmark Precedents:
  • Union of India v. Amar Singh AIR 1960 SC 233: The Supreme Court examined Section 192, affirming that an agent remains answerable to the principal for the performance of the sub-agent, while privity of contract generally shields the sub-agent from direct claims by the principal absent fraud.
  • De Bussche v. Alt (1878) 8 Ch D 286: The Court of Appeal held that where a sub-agent commits a breach of trust, fraud, or secretly profits from the transaction, the lack of privity under the general rule of Section 192 is pierced, enabling the principal to recover directly from the sub-agent.
  • Calico Printers' Association v. Barclays Bank (1931) 145 LT 51: The Court ruled that the principal cannot maintain a direct action for negligence against a sub-agent due to lack of privity, holding that the intermediate agent is the sole party responsible to the principal under Section 192.
Courtroom Practice & Strategic Litigation Guidance:

If a principal suffers loss due to a sub-agent's ordinary negligence, the suit must be filed against the original agent, who is vicariously liable under Section 192. However, if the sub-agent committed embezzlement, secret commissions, or fraud, plead Section 192 Paragraph 3 explicitly and invoke De Bussche v. Alt to maintain a direct suit against the sub-agent.

Section 191 All 266 Sections of Indian Contract Act Section 193