Gunalan Husmet Sdn Bhd instructed John to carry a consignment of eggs from Bukit Tinggi to Kuala Terengganu. Unfortunately, the lorry carrying the goods was involved in a road accident near Mentakab. The repair of the lorry would take a few days. Since John did not want to wait that long, he sold off all the eggs for half of its price. Gunalan Husmet Sdn Bhd was not satisfied with John’s action. How to advise the company?

The issue :

Whether there is a creation between Gunalan Husmet Sdn Bhd and John as his agent under necessity?

Answer:

Facts:john's lorry full of eggs met with an accident in between the journey. Repair of lorry would have taken few days,so he sold off eggs half of price.

Reference: As per indian contract act ,1872,for creation of agency by necessity ,following conditions must be satisfied given below:-

- there must be real and definite necessity for the agent to act promptly

-it must be impossible for the agent to get instructions from principal

-the agent must act honestly in interest of principal

-the agent must adopt reasonable and practicable course under the circumstances

-the agent must have been in the posession of goods of the principal

Analysis:it would have taken few days to rapair the lorry ad selling of the eggs were necessary otherwise it had got rotten .in this situation ,john was not in position of getting instructions from principal as it was necessary for him to sell eggs immediately . And he performed his duty in interest of Gunalan to prevent eggs from getting rotten by acting reasonably under such circumstances.

Conclusion:on the basis of points mentioned above , it is seen that John had satisfied all the conditons for creation of contract under such situation. Therfore, it is concluded that an agency by necessity was created between Gunalan and John and all the actions of John were in interest of Gunalan.