Read also: MAY AN AGENT PURCHASE THE PROPERTY ENTRUSTED TO HIM BY THE PRINCIPAL?
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Unless prohibited by the principal, the agent may appoint a sub-agent or substitute.
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A sub-agent is a person employed or appointed by an agent as his agent, to assist him in the performance of an act for the principal.
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The principal will not be liable to third parties for the sub-agent’s acts but the agent will be liable to the principal or third parties if the sub-agent acts wrongfully.
By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. Although the relationship of the agent and the principal is imbued with trust, an agent may however appoint a substitute or a sub-agent to assist him in the performance of an act for the principal.
Civil Code provides that:
“The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute:
- When he was not given the power to appoint one;
- When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent.
All acts of the substitute appointed against the prohibition of the principal shall be void. “
Accordingly, unless prohibited by the principal, the agent may appoint a sub-agent or substitute.
A substitute of an agent or a sub-agent is a person employed or appointed by an agent as his agent, to assist him in the performance of an act for the principal which the agent has been empowered to perform. The agent in this situation is a principal with respect to the substitute. And the law allows such substitution for reasons of convenience and practical utility.
An agent however may not delegate to a sub-agent where the work entrusted to him by the principal to carry out requires special knowledge, skill, or competence unless he has been authorized to do so by the principal.
While ordinarily the selection of an agent is determined largely by the trust and confidence that the principal has in the agent, the principal need not fear prejudice as he has a right of action not only against the agent but also against the substitute with respect to the obligations which the latter has contracted under the substitution.
The principal will not be liable to third parties for the sub-agent’s acts but the agent will be liable to the principal or third parties if the sub-agent acts wrongfully. And any act done by the substitute or sub-agent in behalf of the principal is deemed an act of the principal. Consequently, neither the agent nor the substitute can be held personally liable so long as they act within the scope of their authority.
The sub-agent may also be the agent of the principal if he is in actual control of the business and the principal knows of his appointment, or knows that his appointment is necessary, and the agent was not prohibited from employing a sub-agent.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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If the agent who appointed a sub-agent passes away, is that substitution still valid and in effect? The principals have no objections for the substitute agent taking over as agent but the difficulty lies in the fact that there are 20 principals located all over the world and simply appointing a new agent, though doable, will prove to be cumbersome, expensive and time consuming. Will appreciate your thoughts on the matter. Thank you!