8. ‘D’ a carrier discovers that a consignment of tomatoes owned by ‘E’ has deteriorated badly before the destination is reached. He, therefore, sells that consignment for about a third of the market price. ‘E’ sues ‘D’ for damages. Decide.

1. Facts of the Case

• ‘E’, the owner of a consignment of tomatoes, hires ‘D’, a carrier, to transport the goods to a specified destination.
• During the journey, the tomatoes deteriorate badly due to natural causes before reaching their destination.
• Observing the perishable condition of the goods, ‘D’ sells the entire consignment at approximately one-third of the market price to prevent total loss.
• After the incident, ‘E’ sues ‘D’ for damages, claiming that D had no authority to sell the goods and that he acted beyond his contractual duty as a carrier.
• The issue arises whether D’s action was justified under the law, or whether E’s claim for damages is valid.

2. Issues in the Case

1. Whether ‘D’, as a carrier, had the legal authority to sell the perishable goods without E’s prior consent.
2. Whether D’s action can be justified under the doctrine of necessity or agency by necessity.
3. Whether ‘E’ is entitled to claim damages for the sale at a price much lower than the market value.
4. Whether ‘D’ acted prudently and in good faith while dealing with the perishable goods.

3. Legal Principles Covered

a) Doctrine of Agency by Necessity

• Under Sections 188 and 189 of the Indian Contract Act, 1872, an agent in certain circumstances may act without express authority if it is necessary to protect the interests of the principal.
• Section 189: “In an emergency, an agent has authority to do all such acts for the purpose of protecting his principal from loss as a person of ordinary prudence would, under similar circumstances, do for his own case.”
• In this case, ‘D’ (carrier) becomes an agent of necessity for ‘E’ (owner) when the tomatoes, being perishable, began to deteriorate.
• Since D acted to prevent total loss, his act may be protected under Section 189, provided he acted in good faith and as a reasonable person would.

b) Duty to Act in Good Faith and Reasonable Manner

• The carrier must show that:
  1. An emergency existed (i.e., goods were perishing).
  2. It was impossible to communicate with the owner for instructions.
  3. The action taken was reasonable and in the interest of the owner.
• If these conditions are met, the act is justified even without explicit authority.

c) Section 70 – Obligation of Person Enjoying Benefit of Non-Gratuitous Act

• Section 70 of the Indian Contract Act also applies when a person lawfully does something for another without intending it to be gratuitous, and the other person enjoys the benefit.
• Here, though E did not instruct D to sell, D’s act saved part of the value of the goods that otherwise would have been completely lost.
• Therefore, D cannot be held liable for damages if he acted prudently to preserve value for E.

d) Case Laws

1. Great Northern Railway Co. v. Swaffield (1874) LR 9 Ex 132
   • The carrier who received a horse had to place it in a stable when the consignee was not available.
   • It was held that the carrier became an agent of necessity and could recover expenses reasonably incurred for the horse’s protection.
2. China Pacific S.A. v. Food Corporation of India (The Winson) (1982) AC 939
   • Recognized that in emergencies, a shipmaster or carrier can act as an agent of necessity to protect perishable cargo, provided he acts in good faith.
3. Section 189 (Indian Contract Act, 1872)
   • Explicitly recognizes agency in emergencies, allowing reasonable actions for protecting the principal’s interests.

4. Possible Judgement

• The court will likely dismiss E’s claim for damages, holding that D acted as an agent of necessity.
• Since the tomatoes were perishable and had deteriorated badly, immediate sale was the most prudent course of action to minimize loss.
• Selling the tomatoes at one-third of the market price does not automatically indicate negligence or bad faith if D acted honestly and reasonably.
• There was no time to seek instructions from E, and D’s act was lawful under Section 189.

Hence, the judgment may be as follows:

1. D was justified in selling the consignment as an agent of necessity.
2. E is not entitled to damages since the sale was made to prevent greater loss.
3. D’s action falls within the protection of Sections 189 and 70 of the Indian Contract Act, 1872.
4. However, D must account for the sale proceeds to E after deducting reasonable expenses incurred.

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