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N Cal Attorney
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What is the legal difference between a subcontractor and a

Resolved Question:

What is the legal difference between a subcontractor and a consultant or agent? This has nothing to do with the construction business. I run a financial services business and received a contract where we're required to take various steps with a subcontractor. Subcontractor is not defined? We use consultants. We use agents. What is the legal distinction?
Submitted: 3 years ago.
Category: Business Law
Expert:  N Cal Attorney replied 3 years ago.
A consultant is someone who consults but has no power to act on behalf of another.

An agent by definition is someone who does have the power to act on behalf of someone else.

Sometimes the roles overlap. If someone hires me to review and comment on a proposed contract, I would be acting as a consultant. If they also ask me to send proposed changes to the other party, that would make me into an agent since they authorized me to do something on their behalf.

A subcontractor is considered an agent. If you hire me to build a barn and I hire a roofing company to build the roof, the roofers are my agents and subcontractors because they are acting on my behalf in fulfilling part of the contract.

The California Civil Code adopts a simple common law definition of an agent:
2295. An agent is one who represents another, called the principal,
in dealings with third persons. Such representation is called
agency.
From
http://leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=02001-03000&file=2295-2300

South Dakota has a similar definition:
59-1-1. Agency defined. Agency is the representation of one called the principal by another called the agent in dealing with third persons.
From
http://legis.state.sd.us/statutes/DisplayStatute.aspx?Type=Statute&Statute=59-1-1

It is difficult to answer abstract questions, but I hope this information is helpful. If not, please feel free to ask any follow up questions you may have.
Customer: replied 3 years ago.
Abstract indeed. So would the litmus test be whether one is giving a third party the right to act on one's behalf?

A subcontractor has the right to act on one's behalf, but a consultant doesn't? Actually it doesn't matter what one calls them, it's whether one allows them to act on one's behalf or not act on one's behalf, based on what is in the contract.
Expert:  N Cal Attorney replied 3 years ago.
Yes, the defining characteristic of an agent is the ability to act on behalf of the principal with a third party.

A consultant has no power to act on behalf of the principal, but an agent does.
N Cal Attorney, Attorney
Category: Business Law
Satisfied Customers: 8190
Experience: Since 1983
N Cal Attorney and 2 other Business Law Specialists are ready to help you
Expert:  N Cal Attorney replied 3 years ago.
Thank you for accepting my answer.

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