Mark was desperately looking for a human resource manager for his office. As there were no suitable candidates, he decided to ask his mother, Mabel, to work as the temporary human resource manager at his office. She requested for a monthly salary of S$2,000 and carefully discussed with Mark about the working hours and job responsibilities. In addition, she wanted her salary to be paid directly to a charity that she had founded. Mark agreed verbally. However, in her excitement at starting work, Mabel forgot to sign an employment contract.
At the end of the month, Mark refused to pay Mabel. He claimed that she was only doing him a favour and hence, he was “not legally obliged to pay” her any monies. He also noted that there was no written contract to bind both of them.
Explain to Mabel whether there was a valid contract formed. In your analysis, you should discuss the four (4) elements of a valid contract. Conclude whether Mabel can enforce Mark’s promise to pay the S$2,000 as monthly salary to her charity. (25 marks)
Consider your organisation (or one with which you are familiar).
(a) Identify, and briefly describe the business of the organisation. Describe a situation where you could act as an agent for that organisation. The description should contain relevant details that would support your analysis, including the tasks assigned to you as an agent. (5 marks)
(b) Identify and explain two (2) different types of authorities which you may possess as an agent, for the purposes of establishing a valid contract between the organisation and the third party. For the purposes of this question, agency arising from the operation of law should not be discussed. It is important to support your analysis with relevant examples, based on the situation that you describe. (20 marks)
Owen was the owner of an office building that was built 5 years ago. The building was fully tenanted, with the tenants having signed 5-year lease agreements. Most of these agreements were due to expire within 6 months. Owen had a gut feeling that they would not be renewed by the tenants, although they had not said anything to Owen yet. There were newer office buildings nearby and their rental rates appeared very competitive.
Apex Investment Fund (AIF) wanted to purchase the office building from Owen. They told Owen that the rental income from the office building would be a good way to diversify their revenues. When AIF went to meet Owen and inspect the office building, they were impressed with the location of the building. AIF asked Owen about the tenants and the condition of the building.
Owen replied, “The building is fully tenanted. I think the condition of the plumbing and wiring for all the offices is still top-notch.” He was very unwilling to discuss more about the tenants as he did not want AIF to know that there is a possibility that some of the tenants might not renew their leases. Unknown to Owen, the plumbing and wiring also had deteriorated badly due to poor workmanship during the construction and fitting out stages.
Satisfied with the answers, AIF signed the contract with Owen to purchase the office building. Two weeks later, AIF found out from many tenants that they do not intend to renew their lease agreements when these expired within the next few months. In addition, AIF’s internal surveyor went to survey the building and found issues with the wiring and plumbing within the building.
AIF was furious and wanted to void the contract immediately.
Based on the statements made by Owen, define and identify one (1) possible ground on which AIF could rescind the contract. Analyse and describe whether AIF would be able to successfully void the contract. Support your analysis with reasons and case law. (25 marks)
Orange is a fashion apparel retail chain. For the upcoming Chinese New Year, it decided to order 1,000 trendy cheongsams from Fine Dresses Limited, a China manufacturer of fashion apparels.
These silk cheongsams were specially embroidered by hand and had semi-precious stones sewn onto them. Orange emphasized to Fine Dresses that the delivery date is very important as it was planning their year-end Christmas marketing campaign around this delivery date.
Fine Dresses agreed to deliver the cheongsams to Orange by 1 November. In anticipation of the delivery, Orange conducted a massive marketing campaign within Singapore, with billboards, TV and newspaper advertisements and social media postings, with each cheongsam being advertised at a sale price of S$100.
A multi-national corporation saw the advertisements and placed an order with Orange for 200 cheongsams as corporate gifts. They were prepared to pay S$300 per cheongsam. Hence, Orange placed an order for 200 more cheongsams with Fine Dresses but with the same delivery date.
Fine Dresses failed to deliver the cheongsams by 1 November. Orange kept sending emails to chase Fine Dresses but the latter still failed to deliver the cheongsams by Christmas. As of end December, Orange decided to sue Fine Dresses on the basis of breach of contract.
Advise Orange as to whether it would be able to claim for damages. In your analysis, you should explain and discuss the four (4) aspects of damages. Support your analysis with reasons and case law. (25 marks)
Abigail had built up a successful online business, selling dresses and skincare products that were imported from Korea. She decided to sell the business as she wanted to take a break from work.
She was approached by Bernard, who expressed an interest in purchasing the business. He asked why the business had been so successful. Abigail replied that it was because “there are no other online shops that sell the same Korean brands as my e-commerce shop” and showed recent newspaper articles that featured her shop to prove her statement. Bernard read the newspaper articles and nodded happily.
Abigail further told Bernard, “I believe that the annual profits for my shop is about $1.5 million.” Bernard asked his accountant, David, to verify and investigate Abigail’s stated level of profits for her business. David confirmed Abigail’s statement but, unknown to Bernard and David, the firm only made around $150,000 profit per year. Bernard asked for a few weeks to consider the proposal to buy Abigail’s business.
During those few weeks, Abigail discovered another e-commerce shop, KFashion, was about to start operations and sell similar brands as Abigail’s e-commerce shop. Abigail failed to inform Bernard of this.
Finally, Bernard agreed to purchase Abigail’s business. He subsequently discovered, within a month, the true level of profits as well as the launch of KFashion.
Bernard wants to rescind the contract for the purchase of Abigail’s business and has come to you for advice.
Explain to Bernard if he is entitled to rescind the contract, taking into account any limitations imposed by law on his right to rescind. In your analysis, you should identify and evaluate the actions (including any failure to act) of, and the relevant statements made by, Abigail.
In your answers, you are required to cite the relevant case law to support your views as well as demonstrate well-developed written proficiency in the flow and content of your analysis. (25 marks)
MusicFest Productions (MFP) wanted to organise a concert for a well-known boy band, Three Dimensions, to be held on 1 January 2015.
On 1 July 2014, MFP appointed SuperAds Agency as the advertising agency to publicise the concert. The advertising contract contained the following Clause 8: “It is a term of this contract that SuperAds Agency will place daily newspaper advertisements in all the daily English and Chinese newspapers, between 1 October and 20 December 2014.”
On the 15 November, MFP discovered that SuperAds Agency had not placed any advertisements in the Chinese daily newspaper on 8 November and 10 November. MFP informed SuperAds Agency that it had breached “a condition of the contract” and so it terminated the advertising contract on 18 November. SuperAds Agency was angry and insisted that the contract cannot be terminated.
MFP ignored SuperAds Agency’s response and immediately engaged another advertising company, ProAdvertising Agency. The new agreement required ProAdvertising to engage in an intensive daily advertising campaign between 20 November and 20 December. However, by 22 November, all 100,000 tickets for the concert had already been sold so MFP cancelled its contract with ProAdvertising. There was no clause in the contract which permitted such a cancellation. ProAdvertising was extremely upset as it had pre-booked all the advertisement spaces with the newspapers.
.(a) Advise MFP as to whether it was legally entitled to discharge the contract with SuperAds Agency. In your analysis, identify the nature of Clause 8 of the contract and examine the consequences of breaching such a term. You should examine the issues from MFP’s perspective. (12 marks)
.(b) Explain to ProAdvertising whether there was any legal basis for MFP’s cancellation of its contract and MFP’s attempts to stop ProAdvertising from performing its contractual obligations. You should conclude your analysis by briefly stating the claims (if any) which ProAdvertising can make. You should examine the issues from ProAdvertising’s perspective. (8 marks)
Peter, the Managing Director of CompuMac Limited, was planning a company trip for the staff.
The staff wanted to go to Kuala Lumpur to visit the inaugural “Global 3-D Printing” exhibition that boasts of 3-D printing technology experts participating from all around the world. They wanted to talk to the experts about CompuMac’s patented 3-D technology and seek alliances with such experts on research and development projects.
Peter booked a 25-seater coach from BestCoach, at a price of S$2,000 for a return trip from Singapore to Kuala Lumpur. Peter, on behalf of CompuMac, paid a deposit of S$500 to BestCoach five days before departure date.
Analyse the following scenarios. For each scenario, advise Peter as to whether contract between CompuMac and BestCoach can be discharged and if yes, identify the appropriate grounds for such discharge. In your analysis, examine whether CompuMac is entitled to a refund of the deposit or alternatively, is required to pay the balance amount to BestCoach.
(a) Scenario 1 – There was heavy monsoon rain in Johor Bahru. The roads in Johor Bahru were flooded and no longer accessible. BestCoach refused to proceed with the coach journey on the departure date, although the roads after Johor Bahru and leading into Kuala Lumpur were clear and accessible.
(b) Scenario 2 – There was heavy flooding in Kuala Lumpur. BestCoach offered to provide a slow drive to Kuala Lumpur so that by the time of the coach reached the borders of Kuala Lumpur on the eve of the exhibition, the floods would likely have abated and the coach could then drive into Kuala Lumpur. Peter refused to proceed with the journey on the departure date.
In your answers, you are required to cite the relevant statutory provisions and case law to support your views as well as demonstrate well-developed written proficiency in the flow and content of your analysis. (25 marks)