Contract substance over labels determined outright sale, not agency, where distributor bore payment, risk, and sale obligations.

The agreement's legal character turned on its true substance, assessed from the contract terms and surrounding circumstances rather than party labels. A distributor who had to pay the full value of goods lifted, bear interest on default, assume responsibility for sale proceeds, bad debts, custody and losses, and account for the goods as sold was treated as having bought the goods outright. The absence of a clause for return of unsold stock and the accounting for monthly statements were treated as consistent with sale, not agency. On that reading, the indicators of sale outweighed those of agency, and the arrangement was not a principal-agent relationship.

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Issues: Whether the agreement between the distributor and the manufacturer created a relationship of agency for sale or amounted to an outright purchase of goods by the distributor.

Analysis: The decisive test was the true nature of the contract gathered from the terms of the agreement and the surrounding circumstances, not from the labels used by the parties. The agreement required the distributor to pay the full value of the entire quantity lifted by the end of the month, with interest on default, and made the distributor responsible for realisation of sale proceeds, bad debts, custody, and losses. The distributor was entitled only to commission, but that feature was not conclusive. The absence of any provision for return of unsold goods, coupled with the obligation to account for the full value of the goods and the right to sell on own responsibility, indicated transfer of property to the distributor. The clause requiring monthly statements was treated as an accounting arrangement and not as proof of agency. On reading the agreement as a whole, the indicators of sale outweighed the indicia of agency.

Conclusion: The agreement did not create a principal-agent relationship. It evidenced an outright purchase by the distributor, and the Tribunal was wrong in holding otherwise.

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