LAW299 UITM

1. QUESTION 1
Moo & Co. in Ipoh, engaged the services of a carrier, BZ Express to deliver 1000 bottles of
fresh milk to its buyer in Singapore. On reaching JB, BZ Express was not allowed to cross
the causeway as there is a ban imposed by the Singaporean authorities on diary products from
Malaysia due to an outbreak of the foot & mouth disease. BZ Express was approached by
Sapi who offered to buy the milk at half price. BZ Express sold the milk. Moo & Co is
unhappy with BZ’s action ad plan to bring an action against BZ for their losses.
Advice Moo & Co. whether they may succeed.

2. Answer :
I The issue in this case or question is whether Moo & Co. may succeed to bring an action against BZ
Express to claim for the losses.
L
The law applicable for this question is law of agency. Agency, being a form of a contract is governed by
the contracts Act 1950. Section 135 of the said Act defines an “agent” as a person employed to do any
act for another or to represent another in dealings with third persons. The person for whom such act is
done or who is so represented is called the ‘principal’.
An Agency is formed by the agreement from both parties which are principal and agent. However,
agency may be formed in five other ways. For this case, it is formed by necessity. Section 142 provides,
‘An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal
from loss as would be done by a person of ordinary prudence, in his own case, under similar
circumstances.
Agency by necessity may happen when a person is entrusted with another person’s property and it
becomes necessary for him due to the emergency situation, to do something in order to preserve and to
protect that property although he has no authority to do so. However, there are some conditions to be
fulfilled before a person can become an agent by necessity.
First, there must be a real and actual emergency. The agent’s action is necessary in the circumstances to
prevent loss to the principal with respect to the goods which the agent is in charge of. Second, the agent
was entrusted with the principal’s property or goods. Third, it is impossible for the agent to get the
principal’s instruction at that time. Whenever an emergency occurs, an agent is under a duty to
communicate with the principal to get some instructions. Fourth, the agent of necessity has acted in good
faith.
A
The relevant case that can be refer to is Great Northern Railway V Swaffield. In this case, the railway
company (plaintiff) has been entrusted to deliver a horse of the defendant to a destination. But when it
arrived, nobody came to take the horse. Plaintiff then took care of the horse to preserve its safety.
Plaintiff claimed the expenses to defendant but defendant refused to do so. It was held that plaintiff was
an agent of necessity and entitled for the claim.
Next, case is Springer V Great Western Railway. The railway company as defendant agreed to carry
plaintiff tomatoes to a destination. Due to some problems, the defendant sold the tomatoes without
communicate it to the plaintiff. Plaintiff then sued the defendant. It was held that the plaintiff was
entitled for the damage because the defendant was not an agent of necessity as they have failed to
communicate with the plaintiff when they could have done so.
Applying it to the current situation, Moo & Co. engaged BZ Express to deliver 1000 bottles of fresh milk
to its buyer in Singapore. On the way to deliver, problem arise and BZ decided to sell the milks to other
buyer with half price. Moo & Co. plan to take action against BZ Express for their losses. As refer to the
two cases above, in order before a party become an agent of necessity, they must fulfil the four
conditions. In this case, there is a real emergency because there is ban for dairy products.

3. Next, BZ Express is an agent entrusted with The Moo & Co.’s property. Third, the agent must have
attempt to communicate with the principal before taking an action. However, BZ Express failed to fulfil
this conditions as they did not communicate with Moo & Co. before they sold the milk to other buyer.
Therefore, Moo & Co. will succeed to take an action against BZ Express for their losses because BZ
Express were not agents by necessity because they have failed to communicate with Moo & Co. when
they could have done so.
C In the conclusion, Moo & Co. will succeed to bring an action against BZ Express for their losses.

4. QUESTION 2
Sheila instructed Majid to buy a second hand Ferrari at a price of not more than RM 200,000.
After surveying all available places, the lowest price that he could obtain was RM 250,000.
Without consulting Sheila, Majid arranged for the car to be imported. Sheila was not
informed that she would have to pay additional sum for the tax, freight charges and insurance
for the imported car as she thought the price includes all charges. Upon discovery, Sheila is
upset and refused to proceed with the purchase as the amount she has to pay adds up to RM
350,000. Majid claims that she is bound by the contract as he acted within his authority.
Advise Sheila.

5. Answer :
I The issue in this case or question is whether Sheila is bound by the contract and ought to proceed with
the purchases.
L
The law applicable for this question is law of agency. Agency, being a form of a contract is governed by
the contracts Act 1950. Section 135 of the said Act defines an “agent” as a person employed to do any
act for another or to represent another in dealings with third persons. The person for whom such act is
done or who is so represented is called the ‘principal’.
An Agency is formed by the agreement from both parties which are principal and agent. However,
agency may be formed in five other ways. For this case, it is formed by express appointment. Section
140 states that “an authority is said to be expressed when it is given by words spoken or written.” This is
where the principal appoints the agent expressly, either orally or in writing. The principal clearly informs
the agent that he is appointed as an agent of the principal. Hence, giving the authority to the agent so that
the agent may represent the principal.
There are 9 main duties of an agent towards the principal as provided by the Contract Act. However,
there are only three duties that are related to this case, First, an agent must obey the principal’s
instruction. Section 164, provides an agent is bound to contract, in the absence of any such directions,
according to the custom which prevails in doing business of the same kind of the place where the agent
conducts the case when the agent acts otherwise, if any loss be sustained, he must make it good to his
principal, and if any profit accrues, he must account for it.
Second, the agent must exercise care and diligence, and use all skills he possesses in carrying out his
work. Section 165 provides, an agent is bound to conduct the business of the agency with as much skill
as is generally possessed by persons engaged in similar business, unless the principal has notice of his
want of skill. The agent is employed for his professional service, he must use all his skills and expertise
as usually required from a same professional man unless the principal has notice of his lack of skill.
Third, an agent must communicate with the principal during emergency or difficulty. Section 167
provides, it is the duty of an agent, in cases of difficulty, to use all reasonable diligence in
communicating with his principal and in seeking to obtain his instructions. The agent must use all
reasonable diligence to communicate with and to obtain instructions from his principal in case of
emergency or difficulty.
However, if it’s impossible, the agent may use his own discretion to safeguard the interest of the
principal. If the agent fails to use reasonable diligence to contract the principal during emergency and as
a result a loss caused to the principal, the agent will be liable.

6. A
The relevant case that can be refer to our current case is Turbin V Bilton. In this case, the agent has been
instructed by the principal to insure his vessel. However, the agent failed to do so. The vessel was lost
and as a result the principal sustained the losses. The court held that the agent is liable for breach of duty,
due to his failure to obey the principal’s instructions. The agent is liable to pay compensation for the loss.
Applying it to the current situation, Sheila instructed Majid to buy second hand Ferrari at a price of not
more than RM 200,000. This has made Majid an agent to Sheila since Sheila has formed an agency by
express appointment. Majid have surveyed all available places, and the lowest price that he could obtain
was RM250,000. Without consulting and informing Sheila about the additional sum for the tax, Majid
arranged for the car to be imported.
Upon discovery, Sheila is upset and refused to proceed with the purchase. As refer to the duties of agent
towards principal, Majid had breach his duty as an agent as he failed to fulfilled all the three duties. As a
result, Sheila have to suffered losses since the purchase amount has increased up to RM350,000 whereas
she has informed that the price must not exceed RM 200,000. Since Majid did not communicate with
Sheila before taking an action, he will liable for the losses incurred. Therefore, the contract between
Sheila and Majid is revoked since there is a breach of duty as an agent.
C In the conclusion, Sheila is not bound by the contract and she is not ought to proceed with the purchase
as Majid is liable to pay for the losses due to breach of duty as an agent.

7. QUESTION 3
Abu intends to retire and instructed Labi to get a buyer for his restaurant at a price of not less
than RM 80,000. Lebah offered a price of RM 85,000 for the restaurant but Belalang
persuaded Labi to sell it to him at RM 80,000 as he would give pocket money of RM 3,000 to
Labi for securing the deal. Labi did not inform Labu of Lebah’s offer and accepted the offer
of Belalang on behalf of Labu. After Labu signed the sale and purchase agreement, he
discovered Lebah’s offer and the pocket money that Labi received from Belalang. Being
unhappy with the whole situation, Labu refused to proceed with the contract with Belalang or
pay Labi’s commission. Labi and Belalang intend to sue Labu for breach of contract.
Advice Labu.

8. Answer :
I The issue in this case or question is whether Labu is entitled for the sue intended by Labi and Belalang.
L
The law applicable for this question is Law Of Agency. Agency, being a form of a contract is governed
by the contracts Act 1950. Section 135 of the said Act defines an “agent” as a person employed to do any
act for another or to represent another in dealings with third persons. The person for whom such act is
done or who is so represented is called the ‘principal’.
An Agency is formed by the agreement from both parties which are principal and agent. An “agency” is
the relationship which subsists between a principal and an agent, where the agent has been authorized to
act for the principal or represent him in dealing with others or third party.
The moment agency contract is created, both agent and principal will have certain rights and duties
towards each other. Normally the rights and the duties are stipulated in the terms of the contract of
agency. However, the contracts Act 1950 also provides certain rights and duties of an agent towards the
principal and vice versa. Breach of any of duties will entitle the other party to bring an action in court for
certain remedies.
There are 9 main duties of an agent towards the principal as provided by the Contract Act and for this
case, the main duty is an agent is under duty not to make any ‘secret profit’ out of the performance of his
duty. ‘Secret Profit’ means any bribe or secret commission or any financial advantage which is over and
above the commission agreed under the agency contract. An agent is not allowed to receive any amount
of secret profit from any third party when dealing on behalf of his principal without his knowledge.
However, if the principal knows of the profit gained by the agent and the principal consents to it, it is no
longer ‘secret’ and therefore no breach of duty by the agent.
Section 168 provides that, if an agent deals on his own account in the business of the agency, without
first obtaining the consents of his principal and acquainting him with all materials circumstances which
have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case
shows either that any material fact has been dishonestly concealed from him by the agent, or that the
dealings of the agent have been disadvantageous to him. If the agent receives profit and the principal
does not consent to it, the principal may recover the amount of the secret profit.
A
As refer to the case of Shipway V Broadwood , where B asking his agent to buy a horse from S with a
condition that the horse is tested to be sound. However, the horse found unsound by B and returned it to
S. The cheque for the payments process were stopped. It is later reveal that B’s agent has been bribe by
S. Hence, S who wanted to bring legal action towards B is not liable as B who is the principal in this case
has the right to repudiate the contract in consequence of the bribe given by S to the agent.
Applying to our current situation, where Labu who wanted to sell his restaurant not less than RM 80,000
by using Labi as his agent to find a buyer. Lebah, whom interested in buying Labu’s restaurant offered
RM 85,000 to Labi but Labi gets a better offer for himself by Belalang, whom also interested in
purchasing Labu’s restaurant by offered Labi RM 80,000 for the restaurant and a pocket money of RM
3,000 for Labi to secure the deal.

9. The problem arose when Labi did not inform Labu about Lebah’s offer. After the agreement signed,
Labu found out about Lebah’s offer and the pocket money offered by Belalang for Labi to secure the
deal. Labu decided not to continue with the contract and Labi and Belalang plan to take action against
Labu, but as referred to case Shipway V Broadwood, the court held that the principal may repudiate the
contract which was made on his behalf by the agent by a third party.
C In the conclusion, Labi and Belalang is not entitled to sue Labu for his actions.