A person to whom authority has been delegated cannot delegate that authority to another. Discuss the consequences of delegation of authority by an agent. Or “Delegatus non-potest delegare”. Discuss the applicability of the maxim in the law of agency and State the exceptions to the rule.
When you appoint an agent, you place trust and confidence in that specific person to act on your behalf. But what happens if your agent decides to pass their duties onto someone else? This brings us to a fundamental principle in agency law, captured by the Latin maxim: “Delegatus non-potest delegare.”
What Does “Delegatus Non-Potest Delegare” Mean?
This maxim translates to: “A person to whom authority has been delegated cannot delegate that authority to another.”
In the context of agency, it means that an agent, having received authority from the principal based on trust and personal confidence, generally cannot transfer that authority or delegate the performance of their duties to a third person.
Why this rule? The relationship between a principal and an agent is deeply personal, built on the principal’s faith in the agent’s skill, integrity, and judgment. The principal chose that agent, not just anyone. Allowing the agent to delegate freely would undermine this foundational trust.
Section 190 of the Indian Contract Act reflects this principle, stating that an agent cannot lawfully employ another person to perform acts they have expressly or impliedly agreed to perform personally.
The Exceptions to the Rule
While the general rule is clear – an agent cannot delegate – there are specific situations where delegation (appointing a sub-agent) is permissible. These exceptions arise when the strict application of the rule would be impractical or contrary to established practice:
- Custom of Trade: If the ordinary custom or trade in a particular business or location permits the agent to employ a sub-agent, then delegation is allowed. For instance, certain types of mercantile agents might, by established practice, use other agents for specific parts of a transaction.
- Nature of the Agency: When the very nature of the agency makes it necessary for the agent to employ a sub-agent, delegation is permitted. This might occur if the task requires specialized skills the agent doesn’t possess, or if the work needs to be done in a place the agent cannot easily access personally.
It’s important to note that even within these exceptions, an agent generally cannot delegate duties that are purely managerial or require their specific personal skill and judgment.
Enter the Sub-agent: Defined
When an agent is permitted to delegate (under the exceptions), the person they appoint is called a sub-agent.
According to Section 191 of the Indian Contract Act, a sub-agent is a person employed by, and acting under the control of, the original agent in the business of the agency.
Consequences of Delegation: Proper vs. Improper Appointment
The legal consequences of an agent delegating authority depend critically on whether the sub-agent was properly appointed (i.g., appointed under one of the valid exceptions, effectively with the principal’s implicit consent) or improperly appointed (without the necessary authority from the principal).
Legal Position of a Properly Appointed Sub-agent (Section 192)
If a sub-agent is appointed under circumstances where the agent had the authority to do so (i.e., properly appointed):
- Principal is Bound: The principal is bound by the acts of the properly appointed sub-agent as if the sub-agent were an agent directly appointed by the principal.
- Agent’s Responsibility: The original agent is responsible to the principal for the acts of the sub-agent.
- Sub-agent’s Responsibility: The sub-agent is responsible for1 their acts to the original agent. However, the sub-agent becomes directly responsible to the principal in cases of fraud or wilful wrong committed against the principal.
In this scenario, while there’s no direct privity of contract between the principal and the sub-agent for routine matters, the sub-agent’s actions can bind the principal, and the sub-agent has a direct duty to the principal in certain serious circumstances.
Legal Position of an Improperly Appointed Sub-agent (Section 193)
If a sub-agent is appointed without any authority from the principal (i.e., improperly appointed):
- Principal is Not Bound: The principal is not bound by the acts done by the improperly appointed sub-agent.
- Principal is Not Responsible: The principal is not responsible to third parties for the acts of the improperly appointed sub-agent.
- Agent’s Responsibility: The original agent is solely responsible for the acts of the improperly appointed sub-agent, both to the principal and to third parties. The agent essentially stands in the shoes of the principal regarding the sub-agent.
In this case, the delegation is a breach of the agent’s duty, and the agent bears all the risk and responsibility for the sub-agent’s actions.
Conclusion
The maxim “Delegatus non-potest delegare” serves as a cornerstone principle reminding agents that their authority is personal and based on the principal’s trust. While necessary exceptions exist to facilitate business practices, any delegation must fall within these narrow confines. Understanding whether a sub-agent is properly or improperly appointed is crucial, as it dramatically shifts the legal responsibilities and liabilities among the principal, the original agent, and the sub-agent.