Difference Between Sub Agent And Substituted Agent

Sub-agents and substituted agents are both appointed by an original agent to perform agency duties, but their roles, responsibilities, and relationships with the principal differ significantly. Understanding these distinctions is crucial in agency law, particularly regarding liability and authority. This comparison highlights the key differences between these two types of delegated agents.

What Is A Sub-Agent?

An agent appointed by an original agent to perform part of the duties or a particular task that the principal has entrusted to him is known as a sub-agent. The sub-agent does not have a direct contractual relationship with the principal and is controlled and supervised by the original agent.

The following features allow you to understand the characteristics of sub-agents:

• Appointed by the Original Agent: An original agent selects and grants authorization to a sub-agent rather than a principal.
• No Direct Relationship with Principal: The action of the sub-agent is not directly liable to the principal, except if the action is agreed upon.
• Limited Scope of Authority: The subagent has authority only over the functions delegated to it by the original agent.
• Liability: Acts of sub-agent towards the principal and third parties are undertaken on behalf of the original agent.

Legal Provisions

As per Section 192 of the Indian Contract Act, sub-agents can be appointed with the consent of the principal, and the legal implications of such appointments are also defined.

If the principal does not consent to such an appointment, the original agent will have to be fully responsible for the acts and misconduct of the sub-agent.

What Is A Substituted Agent?

A sub-agent is a person appointed by the principal to act on their behalf, often to perform specific tasks. While the original agent may suggest a person for this role, the principal must formally appoint the sub-agent, establishing a direct agency relationship between the principal and the sub-agent. The sub-agent acts on behalf of the principal and is bound by the terms of the agency agreement.

Key characteristics of sub-agents:

• Appointed by the principal: The principal authorizes the sub-agent's duties, creating a direct and formal relationship.
• Accountability to the principal: The sub-agent is primarily accountable to the principal for their actions.
• Relationship with the original agent: The sub-agent's relationship with the original agent can vary depending on the agreement between the principal and the original agent. The original agent may have some oversight or communication with the sub-agent, but the sub-agent's primary responsibility is to the principal.
• Purpose of appointment: Sub-agents can be appointed for various reasons, including specialized skills, geographical proximity, or to assist the original agent in fulfilling their responsibilities.

Legal Provisions

Indian law allows authorized agents to appoint sub-agents. The original agent is responsible for the sub-agent's actions if appointed without the principal's consent. The sub-agent is liable to the principal. The original agent's liability depends on proper sub-agent appointment. Governed by agency principles within Section 193 of the Indian Contract Act, the relationship's specifics, including liability and direct principal-sub-agent connection, depend on the agreement and circumstances, making it a complex matter.

Difference Between Sub Agent & Substituted Agent

Agents are indispensable in helping incur the costs of making market transactions and in developing legal relationships. But when they are required to involve other agents, they start asking questions about roles and distinctions.

This table will explain to you how each fills in their responsibilities and what the legal playing field would look like if one were to appoint each: