1. Facts of the Case
- Y, the owner of a business, appointed X as his agent through a Power of Attorney to manage and conduct his business.
- Subsequently, X, due to his absence or personal reasons, delegated his authority to his son Z, instructing him to look after the business affairs.
- Z, acting under the authorization of his father (X), entered into a contract in the name of Y and signed it as though he were acting on Y’s behalf.
- The dispute arises regarding whether Z’s act is binding on Y, and whether Z had the legal authority to enter into the contract in Y’s name through delegation by X.
2. Issues in the Case
- Whether X, being an agent of Y, can delegate his authority to another person (his son, Z).
- Whether Z’s contract made in the name of Y is binding on Y under the Law of Agency.
- Whether Z’s actions create any rights or liabilities for Y, the principal.
- Whether the doctrine of “Delegatus non potest delegare” applies to this situation.
3. Legal Principles Covered
a) Section 182, Indian Contract Act, 1872 — Definition of Agent and Principal
“An agent is a person employed to do any act for another or to represent another in dealings with third persons.”
Here:
- Y = Principal
- X = Agent (appointed through Power of Attorney)
- Z = Sub-agent (appointed by X without authority from Y)
b) Section 190 — When Agent Cannot Delegate Authority
“An agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub-agent may, or from the nature of the agency, a sub-agent must be employed.”
This embodies the rule of non-delegation — Delegatus non potest delegare
→ “A delegate cannot further delegate.”
Hence, X cannot delegate his powers to Z, unless:
- The principal (Y) has expressly permitted it, or
- The nature of the work or custom of trade permits such delegation.
c) Section 191 — 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.”
If Z was employed without Y’s knowledge or consent, he would be an unauthorized sub-agent, and his acts will not bind Y, the principal.
d) Section 192 — Representation of Principal by Sub-Agent
“The principal is not represented by, and is not responsible for, the acts of a sub-agent appointed without authority.”
However, the agent (X) would be personally responsible to both the principal and the third party for the acts of the unauthorized sub-agent (Z).
e) Doctrine of Delegatus Non Potest Delegare
- The agent’s powers are personal — he cannot transfer or delegate them to another.
- The principal appoints an agent because he trusts that agent’s skill, judgment, and discretion.
- Therefore, unless authorized, the agent cannot pass on that responsibility.
f) Exceptions to the Rule (Section 190 Proviso & Case Law)
Delegation by an agent is valid only when:
- Express permission from the principal;
- Custom of trade allows sub-agents (e.g., shipping, stockbroking);
- Ministerial acts, i.e., acts not requiring discretion;
- Emergency, where delegation becomes necessary;
- Implied authority, arising from the conduct or nature of the business.
Case Reference:
- John McCain & Co. v. Pow (1890)
Held that an agent cannot delegate unless expressly or impliedly authorized. - De Bussche v. Alt (1878) 8 Ch D 286
Recognized exceptions allowing delegation in special circumstances.
4. Possible Judgement
Based on the facts and the legal provisions of the Indian Contract Act, 1872:
- X was lawfully appointed as agent of Y, with powers under a Power of Attorney.
- X’s delegation of his authority to Z was unauthorized, since:
- The Power of Attorney was personal to X,
- Y did not consent to such delegation, and
- The nature of the business did not require sub-delegation.
Hence, the act of Z, in entering into a contract in the name of Y, was not binding on Y.
Z had no legal authority to contract on behalf of Y.
However, since Z acted under the authority of X, X becomes personally liable for the acts of Z to both Y (the principal) and to the third party with whom the contract was made.
Judgement:
The contract made by Z in the name of Y is not binding on Y.
Y has no liability arising from Z’s acts.
X, having appointed Z without authority, is personally liable for all acts done by Z.
Z has no rights against Y, as his authority did not flow from Y directly.
About lawgnan:
Understand the crucial principle of “Delegatus non potest delegare” under the Indian Contract Act, 1872, at Lawgnan.in. Learn how an agent’s personal authority cannot be delegated without the principal’s consent, and what legal consequences follow if done. Lawgnan.in provides clear, exam-ready explanations of key agency doctrines, including sub-agency, implied authority, and exceptions under Sections 190–192. Dive into detailed case analyses like De Bussche v. Alt (1878) and John McCain & Co. v. Pow (1890) to strengthen your law exam preparation. Visit Lawgnan.in today for complete law notes and case study summaries.
