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

Tobias, a director, urgently needs to protect perishable goods belonging to Rhea, who is abroad and cannot be contacted. Tobias has no authority from Rhea but arranges cold storage for the goods at a reasonable cost. Which method of creating agency may allow Tobias to bind Rhea to the storage contract?

Agency by necessity may apply. In a genuine emergency where the principal cannot be contacted, the agent may act in good faith and reasonably to protect the principal's property. The other methods fail because Rhea made no representation, gave no appointment, and ratification would come only afterwards.

  1. AAgency by necessity, if the strict conditions are satisfiedCorrect
  2. BAgency by ratification, which requires Rhea's prior approval
  3. CAgency by estoppel, because Rhea held Tobias out as agent
  4. DAgency by express appointment, because Tobias acted in her interest

Explanation

Agency by necessity can arise in an emergency where it is impossible to obtain instructions, the agent acts in good faith for the principal's benefit, and the action is necessary and reasonable. Ratification needs approval after the act, not before. There was no holding out by Rhea, and no express appointment.

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