Sections 191 to 195 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
An agent sometimes brings in someone else to help. The Act separates two quite different figures. A sub-agent is employed by the agent and acts under his control; the principal is bound for his acts, but the chain of responsibility runs through the agent. A person the agent is authorised to name for the principal is not a sub-agent at all, but the principal's own agent for that part of the business. These five sections set out who answers to whom.
A sub-agent is a person employed by, and acting under the control of, the original agent in the business of the agency (s.191). If properly appointed, the principal is bound by and responsible for his acts as to third persons; the agent is responsible to the principal for the sub-agent's acts; the sub-agent is responsible to the agent, but not to the principal, except in cases of fraud or wilful wrong (s.192). If appointed without authority, the agent stands as principal to that person and is responsible both to the principal and to third persons (s.193). A person named by an agent who holds authority to name one is not a sub-agent but an agent of the principal (s.194), and the agent must use the discretion of a man of ordinary prudence in selecting him (s.195).
Section 191: the 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."
There are three features: employed by the original agent; acting under the control of the original agent; and working in the business of the agency. All three mark the person as a sub-agent. The principal does not employ him; the agent does. Our article on sections 189 and 190 covers when an agent may bring one in.
Section 192: a sub-agent properly appointed
Section 192 has three paragraphs.
- To third persons: "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."
| Relationship (sub-agent properly appointed) | Rule |
|---|---|
| Principal and third persons | Principal is represented by the sub-agent and bound by and responsible for his acts, as if he were an agent originally appointed by the principal |
| Agent and principal | The agent is responsible to the principal for the sub-agent's acts |
| Sub-agent and agent | The sub-agent is responsible to the agent |
| Sub-agent and principal | Not responsible to the principal, except in cases of fraud or wilful wrong |
If you are setting up a chain of agents, a service agreement can record who may appoint sub-agents and who bears responsibility, so that the statutory scheme is not the only guide.
Section 193: 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."
The contrast with section 192 is sharp. Where the appointment is unauthorised: the agent becomes the principal of that person; the agent is responsible for that person's acts to the principal and to third persons; the principal is not represented by that person, nor responsible for his acts; and that person is not responsible to the principal.
Section 194: the substituted agent
"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."
The key is the authority to name a person to act for the principal. That authority may be express or implied (see our article on section 187). The person named is the principal's own agent for the part entrusted to him. The shorthand "substituted agent" is a common name for this person; the section itself calls him "such person". He is not under the original agent's control in the way a sub-agent is.
The Act's illustrations (s.194).
(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.
(b) A authorizes B, a merchant in Calcutta, to recover the moneys due to A from C & Co. B instructs D, a solicitor, to take legal proceedings against C & Co. for the recovery of the money. D is not a sub-agent, but is solicitor for A.
Section 195: the agent's duty in naming such a 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."
So the agent who names a substituted agent must choose with ordinary prudence. If he does, he is not answerable to the principal for that person's acts or negligence.
The Act's illustrations (s.195).
(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.
(b) A consigns goods to B, a merchant, for sale. B, in due course, employs an auctioneer in good credit to sell the goods of A, and allows the auctioneer to receive the proceeds of the sale. The auctioneer afterwards becomes insolvent without having accounted for the proceeds. B is not responsible to A for the proceeds.
A modern example (ours, not the Act's)
Kiran Exports appoints Bhavna, a freight agent in Chennai, to arrange shipments. Bhavna's contract says nothing about help. She hires Santosh to handle customs paperwork under her supervision. If Santosh is properly appointed (for instance, the nature of the agency requires help), section 192 says Kiran is bound by his acts as to third persons, Bhavna answers to Kiran for them, and Santosh answers to Bhavna and, except for fraud or wilful wrong, not to Kiran.
If instead Kiran had said Bhavna must handle everything herself and she hired Santosh anyway, section 193 applies on its words: she stands as principal to Santosh and is responsible for his acts to both Kiran and third persons. And if Kiran had authorised Bhavna to name a customs broker to act for Kiran, the broker she names is Kiran's agent for that work (s.194), and she must choose with ordinary prudence (s.195).
What can the parties change?
The sections turn on whether the appointment is "proper" or authorised, and on whether the agent holds authority to name a person. The contract between principal and agent can say whether helpers are allowed, whether a named person acts for the principal or the agent, and how they are chosen.
Practical points
- Principals: state in writing whether the agent may bring in help, and whether such persons act for you or for the agent.
- Agents: keep records of how you selected anyone you name; section 195 tests the discretion of a man of ordinary prudence.
Need help with a chain of agents?
If your business uses agents who bring in others, our service agreement drafting can help you spell out who may appoint helpers, to whom they answer and who is responsible when something goes wrong. Other laws may also apply to your trade.
Key takeaways
- A sub-agent is employed by, and acts under the control of, the original agent in the business of the agency (s.191).
- A properly appointed sub-agent binds the principal as to third persons; the agent answers to the principal; the sub-agent answers to the agent, not the principal, except for fraud or wilful wrong (s.192).
- A sub-agent appointed without authority makes the agent his principal and responsible to both the principal and third persons (s.193).
- A person named under authority to name is the principal's agent, not a sub-agent (s.194).
- In selecting him the agent must use ordinary prudence; if he does, he is not responsible for that person's acts or negligence (s.195).
Read next
- Sections 189 and 190: authority in an emergency and when an agent cannot delegate
- Sections 196 to 200: ratification of unauthorised acts and its effect
- Specimen agency contract: format and key provisions
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.