Section 195 The Indian Contract Act, 1872
Section 195 of the Indian Contract Act, 1872 deals with the agent’s duty when delegating authority in the absence of instructions from the principal.
📜 Section 195 – Agent’s Duty in Naming Such Person
"When an agent has, without instructions from his principal, to name another person to act for the principal in the business of the agency, he shall 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 person so named."
🔍 Explanation:
If an agent, acting without specific instructions from the principal, needs to appoint someone else (a sub-agent or representative), the agent must:
Use reasonable prudence (as a normal prudent person would).
If the agent chooses the person carefully and wisely, they are not liable for that person’s actions or mistakes.
✅ Key Points:
Applies when the agent has no directions from the principal.
Agent must act with ordinary care and judgment.
If care is taken, the agent is not liable for the new person's fault.
Protects the agent if they acted responsibly under the circumstances.
💡 Example:
A, an agent for B, is instructed to transport goods but not told how or by whom. A chooses a reputable transport company. If the transport company damages the goods, A is not liable, as he used ordinary prudence in selecting them.
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