Business Law Finals Case Studies PDF

Tutorial 2 (Case study) Tutorial 3 (Case study) Tutorial 5 (Question 1-5) Tutorial 6 (Agency) Tutorial 7 (Partnership) Tutorial 9 Tutorial 2 (Case Study) 1. Sarah advertised in the Newspaper a 2005 model Toyota car for sale. Hafiza sent the following fax to Sarah: “Interested to buy the Toyota car....

Tutorial 2 (Case study) Tutorial 3 (Case study) Tutorial 5 (Question 1-5) Tutorial 6 (Agency) Tutorial 7 (Partnership) Tutorial 9 Tutorial 2 (Case Study) 1. Sarah advertised in the Newspaper a 2005 model Toyota car for sale. Hafiza sent the following fax to Sarah: “Interested to buy the Toyota car. Quote the lowest price.” To this Sarah replied, “The lowest price that I can offer is RM40,000.” Hafiza replied, “I agree to buy the car for RM40,000.” Sarah did not care to answer Hafiza. After waiting for a few weeks Hafiza goes to Sarah with the money to buy the car. Sarah refuses to sell. Examine whether there is an enforceable contract between Sarah and Hafiza. Issue/ Problem Statement: Is there an enforceable contract between Sarah and Hafiza? First we have to look at whether this is an offer or invitation to treat. An offer is a definite proposal made by one party to another, intending to create a legally binding agreement if accepted. (Section 2 (a) of Contracts Act) An invitation to treat is more informal. It invites others to make an offer but does not create a binding contract itself. (Case law: Fisher v. Bell, Pharmaceutical Society of Great Britain v. Boots Cash Chemist) In this case, Sarah provided information of the lowest quote price of the car which does not necessarily mean that she is willing to sell it for that low (it is just an estimate). (It is supply of information. Refer to Harvey v. Facey) There is no contract between as there is no offer and it’s just a supply of information. Additionally, Sarah did Not respond to Hafiza’s consideration. Acceptance must be communicated verbally/orally (by saying yes), body language/conduct (nodding), in writing (written down that RM40,000 is the sell price) In Malaysia, acceptance can be expressed in several ways, as long as it meets the requirements of a valid acceptance. Here are the key principles: 1. Unconditional Assent: Acceptance must be absolute and unqualified. It should be a clear and unequivocal agreement to the terms of the offer. 2. Usual and Reasonable Manner: Acceptance should be expressed in a usual and reasonable manner unless the proposal specifies otherwise. If the offer prescribes a specific method of acceptance, that method must be followed. 3. Written, Oral, or Conduct: Acceptance can be made in writing, orally, or through conduct. As long as it demonstrates a genuine intention to accept the offer, it is valid. Conclusion, there is no enforceable contract between Sarah and Hafiza as their interaction was simply: -Invitation to treat ( where supply of information was given ) -There is no acceptance communicated because Sarah did not answer. Tutorial 3 (Case study) Alfred sends a fax to Bruno offering to sell to him up to 1000 boxes of tinplates at RM10 per box. The offer is to remain open for 72 hours from dispatch of the fax. The fax was sent on Monday at 12:00p.m. Bruno telephones Alfred and states that he could only consider buying the units at a price of RM9 per box. Alfred informs Bruno that he would like a reply to his offer as soon as possible, as he is considering holding on to the boxes of tinplates, as the market price may well rise in the near future. On Tuesday morning Bruno decides to accept Alfred’s offer. As Bruno is leaving the country that day, he instructs his secretary, Cynthia, to communicate his acceptance of Alfred’s offer. Cynthia types a letter agreeing to purchase 1000 boxes of tinplates, “at the price agreed” between the parties. Unfortunately, she posts the letter on Wednesday afternoon at 2:00p.m. The letter reaches Alfred’s office on Thursday afternoon, at 3:00p.m. Alfred immediately reads the letter. Alfred no longer wishes to sell the Tinplates. Advise both parties as to whether there is a contract of sale between the two parties Let's break down the situation and analyze whether a contract of sale exists between Alfred and Bruno. Key Points: ​Initial Offer: Alfred offers to sell up to 1000 boxes of tinplates at RM10 per box, valid for 72 hours from dispatch (Monday at 12:00 p.m.). ​ ​Counter Offer: Bruno counters with RM9 per box, which Alfred does not accept. ​ ​Acceptance Attempt: Bruno decides to accept the original offer on Tuesday and instructs his secretary to send a letter of acceptance, which is posted on Wednesday at 2:00 p.m. and received by Alfred on Thursday at 3:00 p.m. ​ Legal Analysis: 1. Counter Offer and Rejection: ​Section 2(b) of the Contract Act 1950: Acceptance must be unequivocal. A counter offer is not an acceptance but a rejection of the original offer. ​Hyde vs Wrench (1849): A counter offer nullifies the original offer. Once Bruno countered with RM9 per box, Alfred's original offer was effectively rejected. ​ 2. Revival of Original Offer: ​ runo's attempt to accept the original offer after making a counter offer is invalid. The B original offer cannot be accepted once it has been rejected by a counter offer. ​ 3. Communication of Acceptance: ​Postal Rule: Acceptance is generally considered complete when the letter of acceptance is posted. ​However, the acceptance must be within the time frame specified by the offeror. Alfred's offer was open for 72 hours from Monday at 12:00 p.m., expiring on Thursday at 12:00 p.m. ​Bruno's acceptance letter was posted on Wednesday at 2:00 p.m., but it was received after the offer had expired. ​ ​As there is a lapse of time, it counts as the termination of the offer. ​ ​Discuss the lapse of time. Section 7(a) and section 6(b). Conclusion: ​No Valid Contract: The counter offer by Bruno nullified Alfred's original offer. Even though Bruno later attempted to accept the original offer, it was no longer valid. ​Expired Offer: The acceptance was communicated after the 72-hour period had expired, making it invalid. Therefore, there is no contract of sale between Alfred and Bruno. Tutorial 5 (Questions 1 - 5) 1. How do the courts deduce the intentions of the parties (to create legal relations or not to do so) from the terms of a domestic or family agreement? To determine if there is an intention to create legal relations, examine the nature of the agreement made between parties: if it's a commercial context, there is a strong presumption of intention; in social or domestic agreements, intention is generally not assumed. Thus, in social domestic family agreements, there MUST be evidence that one or both parties intend to create legal relations 2. What sorts of Domestic Agreements are the courts willing to interpret as legally binding? In the context of social and domestic agreements, there's a presumption that parties do not intend to be legally bound. However, this presumption can be rebutted. Here are some relevant cases: - Balfour v Balfour (1919): In this case, the court held that a promise made by a husband to his wife was not intended to create legal relations. The matter was considered a family issue in which the courts had no place to interfere¹. - Merrit v Merrit (1969): Here, a contract between a husband and wife, where the husband promised to pay a monthly allowance, was found to contain an intention to create legal relations and was binding². - Jones v Padavatton (1969): The court held that an agreement between a mother and child was not intended to create legal relations but was a family arrangement based on trust¹. - Simpkins v Pays (1955) and Peck v Lateu (1973): These cases illustrate that the presumption against legal relations can be rebutted in social relationships between unrelated individuals¹. 3. When is a commercial agreement never intended to create legal relations? It is about commercial agreements under the topic of Intention to create legal relations. Edward v. Skyways E was an employee of S. S adopted a redundancy scheme in which it promised an ex gratia payment equivalent to the company’s contribution. E accepted the redundancy but S refused to make the ex gratia payment arguing that an ex gratia payment is one made without obligation to do so. Held: (1) commercial agreement so presumption applied and (2) S did not have evidence to rebut it. Refer to the case for commercial agreements. 4. Only contracts that are in writing are valid. True or False? It's a common misconception that contracts must always be in writing to be legally binding. However, oral contracts are indeed valid in many situations. Here are some key points and relevant cases: Oral Contracts Are Valid: - Oral contracts are just as legally binding as written contracts in most cases. - The essential elements for a contract include: - Offer: One party proposes terms (e.g., "I can supply you with 10 boxes of paper"). - Acceptance: The other party agrees to those terms (e.g., "I'll take all 10" or "Please deliver them on Friday"). - Consideration: Something of value exchanged (e.g., payment). - Intention to Be Bound: Both parties intend to create legal relations. - Even if not recorded in writing, these elements can form a valid contract²⁶. - Maggs v Marsh (2006): - In this case, the Court of Appeal considered oral contracts. - The court allowed consideration of post-agreement conduct to ascertain the original agreement's terms. - The focus was on determining whose recollection was accurate¹. - Implied Terms: - English law can imply unwritten terms into a contract to make it commercially viable. - These implied terms help fill gaps in the contract when not all terms are explicitly stated. 5. The Age of Majority Act 1971 provides that the age of majority is 18 years. Tutorial 6 (AGENCY) PLEASE NOTE THAT AGENCY REFERS TO CONTRACTS ACT 1950 this is because a contract can be inherited/ succeeded/ assumed by another person (NOT the original offeror or offeree) In Malaysian law, there are five ways through which an agency relationship can be created: 1. Express Appointment by the Principal: - The principal explicitly appoints an agent through spoken or written words. - An example is a Power of Attorney, where the principal authorizes someone to act on their behalf. - Express terms are specifically agreed upon by both parties at the time of contract formation¹. (Section 139) 2. Implied Appointment by the Principal: (Section 140) - Implied appointment arises when the principal holds out another person as having authority to act for them. - This can occur through spoken or written communication or ordinary course of dealing. - For instance, if someone represents themselves as a partner in a business, they may be considered an agent¹. 3. Ratification by the Principal: (Section 149 & explanation as stated in the revision slides.) An agency by ratification arises where the agent acts outside the scope of his authority but the principal subsequently accepts or ratifies the act of the agent. An agency by ratification arises where the agent acts outside the scope of his authority but the principal subsequently accepts or ratifies the act of the agent. Ratification is defined as ‘the approval by act, word or conduct of that which was attempted (of accomplishment) but was improperly or unauthorizedly performed in the first instance’. Agency by ratification may occur when o an agent who was duly appointed has exceeded his authority or o a person who has no authority to act for the principal has acted as if he has the authority.  Section 149 of the Contracts Act - the effect of ratification is to render the contract as binding on the principal as if the agent had been properly authorized beforehand. Section 150 of the Contracts Act – Ratification may be expressed or implied Ratification is retrospective; i.e. it dates back to the time when the original contract was made by the agent and not from the date of the principal’s ratification. Case: Keighley Maxsted & Co v Durant (1901) Occurs when: 1. A person misrepresents himself as another’s agent when in fact he is not; 2. An agent who was duly appointed has exceeded his authority; 3. A person who has no authority to act for the principal has acted as if he has the authority; And, the Principal ratifies(approve/affirm) the previously unauthorized act/ accept the benefit or contract by word or by action. Principal can either accept or reject Accept/ confirm → Ratification Express/ implied Effect of Ratification → binding contract retrospective (it dates back to the time when the original contractwas made by the agent and not fromthe date of the principal'sratification) 4. Agency by Necessity: (Section 142 Contracts Act 1950) “agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances” There must be a situation of necessity The agent could not obtain instructions from the principal The agent must act in good faith and in the interests of the principal The agent’s act must be reasonable and prudent. - In urgent situations, an agent may act on behalf of the principal without explicit authorization. - For example, if a ship captain sells cargo to save it from perishing, the principal can later ratify this action¹. 5. Doctrine of Estoppel/Holding Out: (Add section) - When the principal's conduct leads others to believe someone is their agent, they are estopped (prevented) from denying that agency. - For instance, if a husband and wife hold themselves out as partners in a business, the husband's actions may bind the wife¹. (a) - (2) (b) - (3) (c) - (1) In Malaysian law, the concepts of apparent authority and implied authority play essential roles in understanding agency relationships. Let's explore the differences: Implied Authority: - Definition: Implied authority arises when an individual is assumed to be authorized to make a legally binding contract on behalf of a principal. - Scenario: It's authority that is not explicitly granted but is indispensable to fulfill the responsibilities of a position or role. - Example: A salesperson in a retail store has implied authority to sell products to customers, even if there's no specific written authorization for each sale³⁴. Apparent Authority: - Definition: Apparent authority pertains to the authority that a third party reasonably assumes an individual or entity possesses based on their actions or representations. - Scenario: When the agent's conduct or the principal's actions lead others to believe that the agent has authority, even if it hasn't been explicitly expressed or implied. - Example: If a company's manager consistently signs contracts on behalf of the company, third parties may reasonably assume that the manager has the authority to do so, even if it's not explicitly stated¹⁵.  😊📝 Remember, apparent authority is about perception, while implied authority is about necessity. Both coexist and serve different purposes in agency relationships! 3. Alan is the stock buyer for a large bookstore, with the discretion to purchase up to RM30,000 of stock per month. In May the bookstore’s usual supplier has a special discount for large orders. This prompted Alan to order RM50,000 of books for the bookstore – twice the size of his usual orders. When the supplier’s invoice arrived at the bookstore, the manager refused to pay. Who is liable for the RM50,000 invoice? Issue: whether the agent has exceeded the authority? Whether there is breach of agent’s duties? Whether there is ratification? Alan is an agent of the bookstore - Must not exceed principal’s instructions - If exceed, it is considered that: 1. The agent has breached the agency contract 2. Is liable for the principal’s loss Thus, Alan has exceeded the authority granted to him and there is ratification by the bookstore manager as Alan has exceeded his authority. Section 149 of the Contracts Act - the effect of ratification is to render the contract as binding on the principal as if the agent had been properly authorized beforehand. As the bookstore manager, the manager must pay the allocated RM30,000 and since Alan made the bookstore suffer a loss - Alan must pay the remaining RM20,000 balance 4. Peter appointed Andrew, a stock agent to buy some cattle for him at RM100 per head. Andrew sold some of his own cattle to Peter, but did not reveal they were his. After the sale, Peter discovered that he could have bought cattle of the same quality from Trevor at RM80 a head, and that the cattle he bought belonged to Andrew. Can Peter have the contract set aside? What is the basis for the action? Issues: whether breach of duties by agent? What remedies available to the Principal? - Not to let his interest conflict with his duty  1. Primary duty of agent is to act solely for the interest of the Principal 2. Agent must not allow the possibility of his personal interest conflicting with the interest of the principal without disclosing this possibility with the principal 3. Upon full disclosure, it is up to the principal to decide whether to proceed with their transaction / agency contract Conclusion: There is a breach of duties by Andrew as he allowed his personal interest to conflict with Peter’s interest without disclosing the possibility with the principal. The remedies available to Peter are revocation of Andrew being an agent/ revocation of agency contract and the transaction of cattle may be nullified. Yes, Peter can have the contract set aside because Andrew has a conflict of interest (wants profit from selling his cattle) with his duty (buying Peter some cattle). Andrew betrayed Peter