Expressed An Interest In Purchasing The Business.




Question 1

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


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.

(600 words)

Question 2

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

thatSuperAds 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

informedSuperAds 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.

(250 words)

(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)

whichProAdvertising can make. You should examine the issues from ProAdvertising’s


(250 words)

 Question 3

Gavin was working for ToyzRU as a procurement manager. The company requested him to

source for and purchase a second-hand van for its deliveries of toys to its customers. In a

meeting with the company’s director, Gavin was instructed that the second-hand van should be

in good condition. He was hesitant about this task that was assigned to him as he knew very

little about vehicles. He bicycled to work daily and the only experience he had with vehicles

was watching car commercials. However, Gavin did not share his concerns with the company’s

director as he wanted the company to have a good impression of his capabilities.

After a few weeks of visiting car dealers, Gavin managed to find a second-hand van.

He noticed that the bonnet and bumper were dented.

However, he was in a rush and hence, did not make any enquiries about the dents. He simply passed his name card (which states his name, job title and office contact details as well as the company’s name) to the car dealer. After completing the details in the contract for the purchase of the van, the car dealer signed the contract and then passed it to Gavin for signature. Gavin signed it, writing above his signature “for and on behalf of ToyzRU”. The van was then delivered to the company.

A week later, the van failed to start. A mechanic confirmed that the van suffered from a numberof serious mechanical defects because it was previously involved in an accident and was repaired poorly.

ToyzRU is now claiming that the contract (which Gavin signed on its behalf) is invalid because he did not follow its instructions to purchase a van that was in “good condition”.

(a) Analyse and conclude whether the contract that was entered into by Gavin (on behalf

ofToyzRU) and the car dealer is valid and binding. In your analysis, you should identify and discuss the relevant relationship between Gavin and ToyzRU.

(500 words)

(b) Discuss whether Gavin had breached any agency duties and if yes, give examples of

duties that have been breached.

(250 words)


Prepare a set of PowerPoint presentation.

Note: Students should select only ONE (1) question (out of the three questions in Section A

above) for the powerpoint presentation. Your PowerPoint presentation must contain at least 20 words. The maximum number of slides is fifteen (15).Please do NOT download and use PowerPoint slide design templates from the Internet.

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