NPC v National Merchandising

NPC v National Merchandising FACTS: ♣ NAMERC NAMERCO O is the represe representa ntativ tivee of New York firm firm Intern Internati ationa onall Commodities Corporation. NAMERCO and NPC exected a contract for   prchase !" NPC from the NY firm #$ lon% tons of crde slfr for its Ma. Cristina &ertili'er Plant for #()$. *omestic Insrance Compan" exected a  performance !ond in favor of NPC to %arantee the seller+s o!li%ation. o!li%ation. ♣  ,he contract stiplated that slfr was to !e delivered at Ili%an Cit" within -) da"s from notice of esta!lishment of a letter of credit and falre wold s!ect the seller and the sret" to pa" li/idated dama%es. President of Namerco of the ♣ On Novem!er 012 03(-2 NPC advised President openin% on Nov. 4 of a letter of credit. ,he notice was received !" the NY firm on Nov. 0(. ,hs the deadline was set on 5anar" 0(. NY firm was not a!le to sppl" and conse/entl"2 the NPC had to sht down the fertili'er   plant. ♣ NPC informed Namerco that non6availa!ilit" of vessel does not excse nonperformance. On Ma" 42 03(72 the 8overnment Corporation Consel rescind rescinded ed the contract contract of the sale and later demand demanded ed from from Namerco Namerco  pa"ment of 9-)$ as li/idated dama%es. *emand was made pon the sret" also. ♣ ,he NPC sed the NY firm2 Namerco and the insrance compan" for  li/idated dama%es. ,he ,C dismissed the case a%ainst the NY firm as it had no risdiction over it. It ordered the respondents to pa" li/idated dama%es. Meanwhile2 Melvin :allick2 the assi%nee of the NY firm sed  Namerco. ;t this case the ,C dismissed. ♣ NAMERCO contends that the deliver" of the slfr conditioned on the availa!ilit" of a vessel to carr" the shipment and acted within the scope of  athorit" as a%ent when it si%ned the contract of sale. ISSUES: 0. :ON the deliver" of the slfr was conditioned on the availa!ilit" of a vessel. NO 1. :ON NAMERCO a cted within the !onds of its athorit". NO 9. :ON the stiplation for li/idated dama%es was enforcea!le despite a findin% that the contract was exected !" the a%ent in excess of its athorit". YES #. :ON *omestic Insrance Compan" is lia!le to NPC. YES

RATIO: 0. ,he invitation to !id issed !" NPC provides that nonavaila!ilit" of a steamer to transport transport the slfr slfr is not a %rond %rond for non6pa"ment non6pa"ment of the li/idated dama%es in case of nonperformance. NAMERCO+s own !id was even more explicit". ,re that the NY firm said that the sale was s!ect to availa!ilit" of a steamer !t NAMERCO did not disclose this to NPC. 1. NAMERCO acted !e"ond the !onds of its athorit" !ecase it violated its principal+s ca!led instrctions <0= that the deliver" of the slfr shold !e C>& Manila and not C>& Ili%an Cit"? <1= that the sale !e s!ect to the availa availa!il !ilit" it" of a steamer steamer and <9= that the seller seller shold shold !e allowe allowed d to withdraw ri%ht awa" the fll amont of the letter of credit and not merel" 4)@ thereof. ♣ NAMERCO is lia!le for dama%es prsant to CC0437 which  provides that the a%ent who exceed the limits of his his athorit" withot %ivin% the part" with whom whom he contrac contracts ts sffic sfficien ientt notice notice of his powers powers is  personall" lia!le to sch part". ,he NY firm !lntl" told NAMERCO that the latter was never athori'ed to enter into the contract and that it acted contrar" contrar" to the repeated instrctions instrctions of the former. Manresa sa"s that the a%ent who exceeds the limits of his athorit" is personall" lia!le and the third person who contracts with the a%ent in sch a case wold !e defraded if he wold not !e allowed to se the a%ent.

9. Article 0#)9 refers to the nenforcea!ilit" of the contract a%ainst the  principal. ere2 the contract containin% the stiplation is not !ein% enforced a%ainst the principal !t a%ainst the a%ent and its sret". CC 0437 implies that the a%ent who acts in excess of his athorit" is personall" lia!le to the  part" with whom he contracted. CC 0434 does not appl" as NPC was nawar nawaree of the limita limitatio tions ns on the powers powers %rante %ranted d !" the NY firm to  NAMERCO. a.amin.cha.an'.kri'el.paco.vien."en A>P Compiled *i%ests  No. # ( ♣ NAMERCO never disclosed to to NPC the ca!led or written instrctio instrctions ns of its principal. principal. &or that reason and !ecase NAMERCO NAMERCO exceeded the limits of its athorit"2 it virtall" acted in its own name and not as a%ent a%ent and it is2 theref therefore ore !ond !ond !" the contrac contractt of sale which2 which2 however is not enforcea!le a%ainst its principal. #. It was NAMERCO that actall" solicited the !ond from the insrance compan" and as earlier explained2 NAMERCO is !ein% held lia!le nder  the contract contract !ecase it virtall" acted in its own name. It !ecame the  principal in the performance of the !ond. ,he insrance compan" acted as a

sret" for NAMERCO. Rle is that want of athorit" of the person who exectes an o!li%ation as the a%ent or r epresentative of the principal will not

as a %eneral rle2 affect the sret"+s lia!ilit" thereon2 especiall" in the a!sence of frad2 even tho%h the o!li%ation is not !indin% on the principal.