Commercial Law Work Example.

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Question 1

The UK Rail vs. Smithfileld case is a striking example of the term – Agency of Necessity. This is the case when, in certain circumstances, the agent is allowed by law to take actions on behalf of the principal without the will, knowledge or any other representation of the principal.

However, certain requirements have to be met, in order for the agent to claim that it acted out of necessity: 1) the actions have been taken for the reason of compelling emergency; 2) impossibility of communication; and 3) interests of the principal (to be genuinely judged by the agency).

The first test to be passed by an agent is the necessity to take salvage actions. In cases of an emergency or a consequential necessity, “the question of whether a Man should insure or not insure is essentially a matter for his own judgment” (as indicated in Sedgwick, Collins & Co Ltd v. Highton and Others [1929] 34 Ll.L.Rep. 448 at 456). It was UK Rail’s decision to put Horace into a ‘resort’ centre, where it has been taken care of very tenderly. UK Rail can easily claim that they were acting out of the emergency and, at the same time, genuinely in the interests of Mr Smithfield, who was planning to enter his favourite pig to the ‘pig of the year’ awards. “The putative agent has to act bona fide and with the intention to preserve or protect that property in the principal’s best interests” (Prager) – the third requirement met.

The commercial impracticability is also among the main tests as well. In our case, as long as UK Rail was not aware of the full name and address of the principal, it was impossible to contact Mr Smithfield and inform him of the delay, which was apparently caused by certain external factors, not the company. In contrast, in the Springer v. Great Western Railway Co, [1921] 1 KB 257: the agent lost the case, because of the existence of the possibility of communication with Springer. Even though the agency was not responsible for the...
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