The question asks to identify the statement that is incorrect regarding the relationship between an agent, a sub-agent, and the principal.

Analyzing Agent-Principal-Subagent Relationships

Let's examine each statement:

• Statement 1: Sub-agent works under the control and on the directions of the agent. This is valid. A sub-agent is appointed by the agent and operates under the agent's supervision and instructions.
• Statement 2: Sub-agent is responsible to the agent only. This is generally valid. The primary accountability of the sub-agent is towards the agent who appointed them.
• Statement 3: Privity of contract exists between the principle and the sub-agent. This is invalid. Typically, there is no direct contractual relationship (privity) between the principal and the sub-agent. The relationship is established through the agent.
• Statement 4: Agent is responsible to the principle for the acts of the sub-agent. This is valid. The agent remains liable to the principal for the actions of the sub-agent appointed by them.

Identifying the Invalid Statement

Based on the analysis, the statement that does not accurately describe the legal relationship is that a privity of contract exists directly between the principal and the sub-agent.

Therefore, the invalid statement is:

Privity of contract exists between the principle and the sub-agent