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ACCA Applied Skills · Corporate and Business Law (Global) · Agency law

A shipping container of fresh fruit belonging to Hamid is stranded at a port because Hamid cannot be contacted. Perishable goods will spoil within a day. Sven, the carrier holding the goods, sells them at a fair market price to avoid total loss. Which of the following is required for Sven to claim to be an agent of necessity?

The key requirement is that it was impossible to obtain Hamid's instructions and Sven acted in good faith in Hamid's interests. Agency of necessity arises from a genuine emergency, not from prior agreement, advance payment or later ratification.

  1. AHamid must later ratify the sale in writing
  2. BSven must have been paid a commission in advance
  3. CIt was impossible to get Hamid's instructions and Sven acted bona fide in Hamid's interestsCorrect
  4. DSven must have held a written agency agreement with Hamid

Explanation

Agency of necessity arises where there is a genuine emergency, it is impossible to obtain the principal's instructions, and the agent acts in good faith in the principal's interests. Prior consent, ratification or a written agreement are not required. Option A is wrong because ratification is not a condition of this kind of agency.

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