AgencySub agentCourt of Appeal

Calico Printers Association Ltd v Barclays Bank Ltd

(1931) 145 Law Times 5119312 min read
The case in brief30-second read
Facts
The plaintiffs shipped goods and engaged Barclays Bank to handle collection of the price. The instructions included an obligation to insure the goods. Barclays employed a foreign bank as its correspondent, that is as sub-agent, to carry out the work at the destination.
Issue
Whether a principal may sue a sub-agent directly for negligence in the performance of the agency work.
Held
The claim against the sub-agent failed. There was no contractual relationship between the plaintiffs and the correspondent bank. The correspondent had been engaged by Barclays, took its instructions from Barclays, and looked to Barclays for payment. The plaintiffs' remedy lay against Barclays, their own agent, which in turn could proceed against the correspondent. The absence of privity was fatal to a direct claim.
Principle
There is no privity of contract between a principal and a sub-agent. A sub-agent is answerable to the agent who employed him, and the principal's remedy for the sub-agent's default lies against his own agent.
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Facts

  • The plaintiffs shipped goods and engaged Barclays Bank to handle collection of the price.
  • The instructions included an obligation to insure the goods.
  • Barclays employed a foreign bank as its correspondent, that is as sub-agent, to carry out the work at the destination.
  • The correspondent bank failed to insure the goods.
  • The goods were destroyed by fire and the loss was uninsured.
  • The plaintiffs sued both Barclays and the correspondent bank, seeking to hold the sub-agent directly liable.

Issue

  1. Whether a principal may sue a sub-agent directly for negligence in the performance of the agency work.

Held

  • The claim against the sub-agent failed. There was no contractual relationship between the plaintiffs and the correspondent bank. The correspondent had been engaged by Barclays, took its instructions from Barclays, and looked to Barclays for payment. The plaintiffs' remedy lay against Barclays, their own agent, which in turn could proceed against the correspondent. The absence of privity was fatal to a direct claim.

Ratio decidendi

Privity follows appointment. A sub-agent is in a contractual relationship only with the agent who employed him, so the chain of responsibility runs principal to agent and agent to sub-agent. The principal cannot leapfrog the intermediate contract, save in cases of fraud or wilful wrong.

Exam use

How to use it in an answer

  • The leading authority reflecting S.192 of the Indian Contract Act on the position of a properly appointed sub-agent.
  • Note the statutory exception: a sub-agent is responsible to the principal for fraud or wilful wrong.
  • The decisive distinction in any problem is whether the person appointed is a sub-agent under S.191 or a substituted agent under S.194, since a substituted agent is in direct privity with the principal.
  • Contrast with De Bussche v Alt (1878), where direct accountability to the principal was established.

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Citation

Calico Printers Association Ltd v Barclays Bank Ltd (1931) 145 Law Times 51

Reported: (1931) 145 LT 51; leading authority on absence of privity between principal and sub-agent; CITATION AND ATTRIBUTION NOT CONFIRMED; the no-privity rule is settled but its attribution to this case was not verifiable, check Bowstead and Reynolds on Agency. This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.