Nitin appointed Shiv as his agent to transport apples from Shimla to Delhi. Due to heavy rain in near Shimla, Shiv was stranded for more than seven…

Section 189 of the Indian Contract Act,1872 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. To constitute a valid agency in an emergency, following conditions must be satisfied. (i) Agent should not be in a position or have any opportunity to communicate with his principal within the time available. (ii) There should have been actual and definite commercial necessity for the agent to act promptly. (iii) The agent should have acted bonafide and for the benefit of the principal. (iv) The agent should have adopted the most reasonable and practicable course under the circumstances, and (v) The agent must have been in possession of the goods belonging to his principal and which are the subject of contract. In the instant case, Nitin appointed Shiv as his agent to transport apples from Shimla to Delhi but due to heavy rain in near Shimla, he has to stop for more than seven days. Shiv sold all the apples in the nearby market below the market rate where he was stranded in fear that the apples may perish. From the above facts, it is clear that an agency by necessity has come into existence between Shiv and Nitin because there was an actual and definite necessity for Shiv to act on behalf of Nitin. Shiv sold the apples at the rate lower than market rate to protect the Nitin from heavy loss. Hence, Shiv is not liable to Nitin for loss.