Lilley vs Doubleday
(1881) LR 7 QBD 510
Case Summary
[Section 211 - Agent's Duty in Conducting Principal's Business]
Facts
The plaintiff, Lilley, instructed the defendant, Doubleday (acting as an agent), to store goods in a specific warehouse. Lilley had insured the goods for their storage in the designated location. However, the defendant stored part of the goods in a different warehouse without Lilley's consent, even though the alternative location was also safe.
A fire broke out at the different warehouse, destroying the goods. The plaintiff lost the insurance benefit as the storage location had been changed without authorization. Despite there being no negligence in the handling of the goods, the plaintiff suffered financial loss due to the defendant's breach of instructions.
Issues
Does an agent breach their duty of obedience by not following explicit instructions from the principal regarding the storage of goods?
Is the agent liable for the value of the destroyed goods due to the unauthorized change in storage location, even in the absence of negligence?
Relevant Legal Provisions
Indian Contract Act, 1872
Section 211 - An agent is bound to conduct the business of his principal according to the directions given by the principal, or in the absence of any such directions according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business. 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.
Judgement
The court held that the defendant (Doubleday) was liable to pay for the value of the destroyed goods. It was established that an agent must strictly follow the instructions of the principal. By storing the goods in a location different from the one specified, the defendant had breached the contract of agency. Even though the alternative storage was safe and there was no negligence, the failure to comply with instructions caused the plaintiff to lose the insurance coverage. The defendant was held absolutely liable for the resulting loss.
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