Having graduated from university, Aaron and Lucy Decided to set up a Business Dealing in Computer Products: Business Law Assignment, NUS, Singapore

Question 1
Having graduated from university, Aaron and Lucy decided to set up a business dealing in computer products. The following conversation took place at a meeting in which they had to discuss various issues relating to the proposed business.

1’set of statements:-

Aaron: Lucy, your dad is super paranoid about our employees and how they can subject us to liability. I am clear that if we set very clear limits on the authority of our employees, they cannot subject us as principals to any liability if they were to exceed the limits of their authority. Our employees will only bind us if they act in accordance with the terms of the express authority we have given them. I hope he will be more at ease after hearing this.

2’set of statements:-

Lucy: You know, my dad is really overthinking. He is even concerned about whether our employee delivery drivers will be careful on the road while delivering our computer products. I told him that if they knock someone down, they will just be fined by the police! How on earth can we even be liable for their careless driving if they knock someone down?

3′ set of statements:-

Aaron: Cool that you are able to assure him! I have no idea why he is so worried about our employees. I would be more concerned about any liability arising from our computer products. I have just instructed our lawyers to draft as wide a clause as possible to exclude our liability for any defects in the products. The wider the better! Since our customers do not enter into any written contracts with us, we can just quietly include the clause excluding liability, in the packaging material and documents which we will send to the customers when we deliver the products they have ordered and paid for. Smart of me, right?

Question 2
2(a) Laura bumped into her old schoolmate, Maggie at the MRT station. They decided to catch up over drinks. Laura then found out that Maggie owned a company, Glow and Shine Pte Ltd (“G&S”) operating a beauty salon with twelve outlets in Singapore and that Maggie was looking for an investor as she was hoping to expand her beauty salon business overseas.

Laura was excited as she has a great interest in anything to do with beauty treatments and saw much potential in the beauty business. They had a few meetings thereafter for Laura to understand the business better. During one of the meetings, Laura expressed her concern about the number of customers who visit the salon regularly for treatment as this impacts the sustainability of the business. Maggie told Laura that the company had 40,000 customers who had just signed up for or renewed annual beauty treatment packages. Laura was so assured about the company’s sustainability upon hearing this. Maggie suggested that Laura could check the records of the company to verify the same but Laura said “We are old schoolmates and I trust that you are telling the truth.”

Shortly thereafter, Laura then signed a contract with Maggie to buy 50% of Maggie’s shares in G&S for $3 million and undertook to subscribe for more shares in the company in the future. The contract was a very comprehensive contract containing detailed terms of the transaction but there was no mention whatsoever of the 40,000 customers.

After the contract was completed, Laura decided to pop into the office of G&S to check on the business. When she spoke to the staff, she found out that business had been declining drastically for a very long time even way before Laura met Maggie at the MRT station. Upon checking the records of G&S, Laura discovered that the company had only 2000 customers with current annual packages and these packages were expiring shortly. As it turned out, Maggie had left the running of the business entirely to her manager, Jane. Jane was recently due for a salary review and in order to impress Maggie so that she would get a good increment, Jane had falsified some company documents without Maggie’s knowledge and showed these falsified documents to Maggie. Jane’s falsified documents showed there were 40,000 customers who had just signed up for or renewed annual beauty treatment packages. Maggie could have checked the information from the other company records before telling Laura but she did not bother to do so.

Laura now wants to get out of the contract with Maggie and recover the purchase price she paid for the shares.

Required

Advise Laura as to whether she has any legal basis to get out of the contract with Maggie and recover the purchase price of $3million paid.

2(b) Juicy Pte Ltd is a company that manufactures and sells blenders for juicing of vegetables and fruits. Belinda was very interested in sticking to a healthy diet through juicing. She bought 1 blender from Juicy Pte Ltd and some additional accessories for the said blender. Under the contract, Belinda paid for the blender and the accessories were to be delivered to her in a month’s time with payment for the accessories to be made by Belinda upon delivery of the same.

When Belinda brought her blender back, she set it up to try it out. Belinda was very careful and followed all the instructions set out in the manual. However, when she tried to juice the fruits in the blender, the blender overheated and the glass compartment of the blender shattered into small pieces and flew all over, cutting Belinda in the process and blinding her in one eye.

Belinda wants to claim against Juicy Pte Ltd for breach of contract. She also does not want to receive the additional accessories nor pay for the same.

Required

Advise Belinda how she may claim there was a breach of contract and whether she is entitled to terminate the contract by reason of the breach of contract.