INTRODUCTION TO COMMERCIAL LAW

(LAW446)

GROUP ASSINGMENT

PREPARED BY :

1. AQILAH BINTI NORDIN 2020968059

PREPARED FOR :

MDM. CHE AUDAH BINTI HASSAN

CLASS: NACAB1A

SUBMISSION DATE : 28th May 2020

Delia owns a hipster café in Johor Bahru. As Delia is going oversea for three weeks. She
instructed her assistant, Ani to manage the café while she is away. A week after Delia left, a
fire broke out in the shop nest to her café and the fire spread to her café causing damage to
the kitchen. Ani tried to contact Delia but failed to reach her. As an effort to reduce losses, Ani
sold off the food stock which was partially damaged in the fire at a lower price. She also sold
off some chairs in the café although the chairs were not affected by the fire. When Delia
returned, she was upset to discover what Ani did. She wants to know if she can make Ani
responsible for her losses. Advise Delia.

*********************************************************************************************************

In regards of the case above Delia v Ani, this is a straight forward example of principal and an
agent .In section 135 of the Contracts Act 150, an agent is defined as a person employed to
do any act for another or to represent another in dealings with third person which this refer as
Ani, Delia’s employee that is managing and look after Delia’s café in Johor Bahru. Also, under
the same section 135, Delia is referred as the principal to whom such an act is done or who is
represented.

There are few issues that has been raised in this case study. The first issue which is Ani tried
to reach Delia but to no avail after the incident of fire bole in the shop nest and the second
issue is that Ani sold her food stock without Delia’s consent and thirdly Ani sold chairs that not
damaged during the shop nest fire also without Delia’s consent.

ISSUE 1:

A fire broke out in the shop nest to her café and the fire spread to her café causing
damage to the kitchen. Ani have tried to reach Delia but to no avail.

Under Section 167, an agent must try his best to communicate with principal. As per case of
Springer v. Great Western Railway Company [1921] 1 KB 257, Great Western Railway
Company as defendant agreed to carry plaintiff’s tomatoes from Channels Island to London,
by ship to Weymouth and by train to London. The ship was stopped at Channels Island for
three days due to bad weather. Eventually, when the ship arrived at Weymouth, defendant’s
employees were on strike, tomatoes were unloaded by casual laborers but it was delayed for
two days. At that time, some of the tomatoes were found to be bad. So, defendant decided to
sell the tomatoes as they felt that tomatoes could not arrive in Covent Garden market in a
good and saleable condition. When plaintiff found out about this, plaintiff wanted to claim
damages from defendant. The court was held that plaintiff was entitled to damages because
defendant ought to have communicated with the plaintiff when the ship arrived at Weymouth
to get instruction. As defendant has failed to communicate with plaintiff when they could have
done so, thus, there was no agency of necessity.

In this case, Ani has used all her skill and disgrace in giving any information to or trying to get
any instruction from the Delia with every resource available. But unfortunately, Delia was not
be able to contact.

[AUTHOR NAME] 1
ISSUES 2:

Ani sold Delia’s damaged food stock without Delia’s consent in order to avoid more
losses.

According to Secton 142 Contract Act 1950, an agency may arise by necessity or in an
emergency. Agency of necessity means a person may become the agent of another without
being appointed as such under certain circumstances.

This can be said as the agent’s action is to prevent loss to the principal with respect of goods,
such as perishable goods. However, agency of necessity does not arise when goods are
merely sold because of inconvenience. Referring to the case of Great Northern Railway Co.
vs. Swaffield (1874) LR 9 Exch 132, the plaintiff railway company had transported a horse to
a station on behalf of defendant. When the horse arrived, there was nobody to collect it. So,
the plaintiff sent it to a stable. A number of months later, the plaintiff paid the stabling charges
and then straight to recover what it had paid from the defendant. In this case, the court was
held that the plaintiff’s claim succeeded even though he is involved in the extension of doctrine
of agency of necessity to include carriers of goods by land. There was an agency of necessity
because the plaintiff was found to have had no choice but to arrange for the proper care of the
horse.

So as Delia is not present in the time and instructions is failed to be received, Ani has act
accordingly by selling all the partially damaged goods in order to cut further losses for Delia’s
business.

Conclusion for these two issues that Ani has used all her resources and diligently tried to
contact Delia and executed her action of selling damaged food stock before it goes bad. This
has help Delia’s business not to go for further losses. So, Delia who has gave her consent to
do what’s best in looking after her business cannot hold Ani responsible and liable for her
actions.

[AUTHOR NAME] 2
ISSUE 3:

Ani has sold undamaged chairs belongs to Delia's cafe without her consent.

An agent should act in good faith. The law clearly stipulates under section 164, of the
Contracts Act 1950, failure of an agent to follows and obey the principal, any losses suffered
by the principal because of action taken by the agent without necessity or consent should be
liable by the agent. This case study can be referred to a similar case of Bostock v Jardine
case in 1865, which the agent was liable when he bought more than he was directed too.

Thus, in our case at hand Ani should not have sold off the chairs that clearly is not damaged
in the fire without the consent of Delia who is the owner of the cafe

In this third issue, the conclusion is Delia can actually hold Ani liable by law on for her
unnecessary action selling Delia’s business assets that is still good to use when the café is
repaired and open for business without her consent. Delia is advice to take a legal action on
Ani undamaged asset sold without her consent and get Ani to pay for her prior to the losses
she suffered.

[AUTHOR NAME] 3