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

Dmitri, a shipping agent, is told by Karl, a cargo owner, to hold goods in storage. A storm threatens the warehouse and Karl cannot be contacted. Dmitri sells perishable goods at a fair price to avoid total loss. Which statement is correct?

Dmitri acted as an agent of necessity and Karl is bound. There was a genuine emergency, instructions could not be obtained, and Dmitri acted in good faith and reasonably in Karl's interest. Express authority or later ratification is therefore not required.

  1. ADmitri acted as an agent of necessity, so Karl is bound by the saleCorrect
  2. BDmitri has no authority because Karl never expressly authorised any sale
  3. CDmitri may act only if Karl later ratifies the sale

Explanation

Agency of necessity arises where there is a genuine emergency, no practical way to obtain instructions, and the agent acts in good faith in the principal's interest. These conditions are met, so no express authority or later ratification is needed.

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