The Indian Contract Act has introduced another concept agent of the principal which is technically called a substituted agent or co-agent. Where an agent, holding an express or implied authority to name another person to act for 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 (Sec. 194).
A directs B, his solicitor, to sell his estate by auction and to employ an auctioneer for the purpose. B names C as an auctioneer to conduct the sale. C is not a sub-agent but is A’s agent for the conduct of the sale. He is also called substituted agent.
Agent’s Duty in Naming or Selecting Substituted Agent:
In selecting substituted 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 he is does not responsible to the principal for the acts or negligence of the agent so selected (Sec. 195).
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 for the loss.