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BM011-3-1 Legal Environment of Business Group

Assignment

Subject : Legal Environment Business

Module Code and Title: BM011-3-1 (Group Assignment)

Submission Date : 4th June 2009

Lecturer name : AMBIKAI S. THURASINGAM

Tutor name : SURESH NAIDU A/L SADASIVAN

Group Member : Syed Muhammad Asim TP018321


Chong Moon Yee TP018573
Esther Henry Shilla TP018026
Ziyad Khalid TP015382

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BM011-3-1 Legal Environment of Business Group
Assignment
Table of Contents

Table of Contents...................................................................................................2

QUESTION.............................................................................................................. 4

INTRODUCTION...................................................................................................... 5

2.0 JUJU (PLANTIFF)................................................................................................6

4.0 Conclusion..................................................................................................... 10

Since both the Timber Supply Limited and Juju were unaware of the fraud, which
was planned by Vivi. Firstly, should search for Vivi and charge him of the fraud,
which he committed, but since he has fled the country the possibilities to find
him has turn to the next of impossibilities. The damages to pay by who is the
main concern here since Juju made the payment to Vivi and not receiving
anything in return is purely a loss. Though on the other hand Timber supply
limited could have been more professional having stated on the receipt only
valid once the cheque has been cleared which could have prevented the
fraudster from prevailing. Both have their rights to argue in court and we think
both the parties are equally balanced and it will be up to the judge to give the
final verdict and give the right decision...............................................................10

5.0 Referencing................................................................................................... 11

6.0 Appendix........................................................................................................12

Group Activities Log Report.................................................................................16

Workload Matrix...................................................................................................18

........................................................................................................................... 18

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Assignment
Marking Criteria

ASSESSMENT CRITERIA Allocated Given

Consistency and quality of presentation 20%


Relevant and consistent presentation; clear intonation and
enunciation

Depth of research 10%


Use of proper research materials and credible sources for the
purpose of discussion and reasoning

Overall impact/ persuasiveness 10%


Ability to persuade the audience with the reasoning presented

Documentation 40%
Clarity and flow of presentation and the ability to consider the
issues within the constraints of the word limit; ability to support
views presented with proper reasoning; use of Harvard
Referencing method to identify the source(s) of information

Others: 10%
work must be type-written, neat and presentable; proper use of
language; presentation aids, dress code

Individual contribution to team 10%

total 100%

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QUESTION

Vivi had a letterhead printed showing the name and address of a large corporation with
offices abroad. Using the letterhead, he ordered and obtained from Timber Supply Ltd a
quantity of timber. Vivi made payment by cheque. Vivi promptly resold the timber to Juju
who in good faith had bought the timber and paid full price for it. Timber Supply Ltd was
asked to deliver the timber to Juju at Juju’s place of business.

It turns out that Vivi’s cheque was not honoured and Vivi fled the country. Timber Supply
Ltd made a police report regarding Vivi’s fraud the next day and stopped the delivery of
timber.

Juju insists on the right to the goods.

You have been appointed to act for Juju (Plaintiff)/ Timber Supply Ltd (Defendant)

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Assignment
INTRODUCTION

A contract is a binding agreement between two or more parties for performing, or


refraining from performing, some specified act(s) in exchange for lawful consideration.

The first requisite of any contract is an agreement (consisting of an offer and


acceptance). At least two parties are required; one of them, the offeror, makes an offer,
which the other, the offeree, accepts S.3 (A) acceptance must communicate. The agreement
will create rights and obligations that enforced in the courts. The normal method of
enforcement is an action for damages for breach of contract, though in some cases the court
may order performance by the party in default.

The mere fact of agreement alone does not make a contract. Both parties to the
contract must provide consideration if they wish to sue on the contract. This means that each
side must promise to give or do something for the other.

In this case, Vivi who is the third party has committed fraud by selling the goods to
juju of which, he was not entitled juju in good faith paid for them. However, later discovered
that Vivi had fled and Timber supply limited who took the cheque from Vivi in return for
Timbers is fraud the cheque bounced. Now Juju [Plaintiff] claims that he has the right to
goods to be delivered where as Timber supply limited [Defendant] think they have no
liability to deliver it since they never had a contract directly with juju and fraud had
discovered.

Our group has chosen to act as a defendant for timber supply limited and act as juju’s
plaintiff, and save guard his rights.

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Assignment
2.0 JUJU (PLANTIFF)

The issue arises for Juju as plaintiff, who is an innocent buyer and had no idea of the
fraud, which Vivi had planned, and in good faith, he made the payment.

As the arguments, Juju has purchased the timber from Vivi. S.2 (b) Contracts Act,
when the person to whom the proposal had made signifies his assent thereto, the proposal is
said to have been accepted. A proposal, when accepted, becomes a promise. The general rule
is that acceptance must communicate to the offeror and there is no contract between both
parties when the communication did not take place. The contract existed when Juju made
acceptance to Vivi that he accepts the offer. There is no revocation before this so the contract
is a valid contract and when a proposal is accepted, it becomes a promise to be follow up by
actions. Acceptance has done in good faith by Juju.

The consideration was made between Vivi and Juju had in respect of buying timbers
he would pay money, thus the contract was formed and the delivery of timbers is subject to
be received.

Section 25 of the Sale of Goods Act (1979) states: ‘ where a person having bought or
agreed to buy goods obtains, without the consent of the seller, possession of the goods or the
documents of title to the goods, the delivery or transfer by that person, or by a mercantile
agent acting for him , of the goods or documents of title, under any sale, pledge or other
disposition thereof ; to any person receiving the same in good faith and without the notice of
any lien or other right of the original seller in respect of the goods.’ Has the same effect as if
the person making delivery or transfer were a mercantile agent in possession of the goods or
documents of title with the consent of the owners’ such section supports juju since he had no
knowledge of the lies which Vivi had promised him. Similar case of Newton’s of Wembley
limited v Williams (1964) [Source 2 page 14].

Had the juju been aware of the lies, which Vivi had told, and then precede he would have not
been an Innocent buyer and thus the favour be advantage of timber supply limited but here
happened opposite, which is in favour of Juju.

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Juju may also acquire goods under a contract, which is voidable (Example:
misrepresentation). In this case, the contract is valid unless and until it is voided. Section 23
Sales of Goods Act provides that where goods resold before the contract has been voided; the
buyer acquires a good title to them provided he buys them in good faith and without the
notice of the seller’s defects of title .This case is similar of Lewis v Averay (1972). [Source 1
page 14]

Juju had made payment in good faith before the discovery of fraud and the contract
was not void at that time when juju accepted offer by Vivi of supply of timbers so juju is
entitled to receive the delivery of timbers.

Another case supporting Juju would be King’s Norton Metal Co v Edridge. A


swindler ordered goods under a false name, which was not that of any identified third party,
and the plaintiffs despatched these goods on credit on the strength of the order. The swindler
disposed off the goods to the defendants. The Court of Appeal rejected the plaintiffs claim on
the ground that this was a simple case of a contract void, able for fraud and not a contract
wholly void. Of course, old and well-established law that goods obtained under a voidable
title and resold to bona fide purchaser cannot claim back by the original owner.

Juju shall placed at the position of bona fide purchaser and who deserves his rights on
the delivery of goods, which he purchased in good faith, and timber supply limited carries the
liability of supplying timbers. Capacity to contract achieved since Vivi and Juju both were
mentally sound and no one had any problem, which would breach the contract.

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3.0 Defendant (Timber Supply Ltd)

As the defendant, Timber supply limited whom after looking at the large
organizations letterhead, which Vivi had shown to influence them to sell their timbers to him,
but later they discovered the cheque that Vivi had given had bounced. Now the plaintiff Juju
demands his supply of timbers. Timber supply limited appeal there was no Contract at all
between Juju and Timber supply limited.

As a rule, a buyer cannot acquire ownership from someone who himself has neither
ownership nor the owners authority to sell. This rule had known as the nemo dat rule from the
phase nemo dat quod non habet (no one can give what he does not have). This rule embodied
in, S 27 of Sales of Goods Act. “where goods are sold by a person who is not their owner,
and who does not sell them under the authority or with the consent of the owner, the buyer
acquires no better title to the goods than the sellers had” .A similar case of Shaw v
Commissioner of Metropolitan Police(1987). [Source 3 page 13]

Vivi had no ownership to the timbers, which he had sold since the cheque had
bounced which was a breach in contract that clearly provides timber supply limited with no
liability to deliver the timbers to Juju.

According to the Section 17 of Contract Act, ‘Fraud’ includes any of the following
acts committed by a party to a contract, or with his connivance, or by his agent, with intent to
deceive another party thereto or his agent, or to induce him to enter into the contract. Intent to
deceive is a misrepresenting party must know that facts had falsely represented. Timber
supply Ltd can use this vitiating factor in a contract, because there is a misrepresentation by
silence occurs when a party fails to disclosed the material facts which the party knows that
material facts will affect the others interests.

According to sale by a person with voidable title S.19 (1) Contracts Act, a person may
obtain possession of goods under a contract, which is void (e.g. mistake) a void contract is, in
fact, no contract at all. A purchaser, for instance, Juju in these circumstances does not acquire
title to the goods. Therefore, cannot pass good title on to anyone else the original owner
[Timber supply limited] will be able to maintain an action in the tort of conversion to recover

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Assignment
the goods or their value from a third party who had bought them in good faith. This case
happened similar of Cundy v Lindsay (1978). [Source 4 page 13]

This contract was void since it was fraud and mistake, which did not count for any liability by
timber supply limited to deliver goods to juju.

There is clearly a breach of contract under S 12 of the Sale of Goods Act (1979) that
the seller must have the right to sell the goods. Vivi never had, so it protects timber limited
from supplying the goods to juju’s place.

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4.0 Conclusion

Since both the Timber Supply Limited and Juju were unaware of the fraud, which was
planned by Vivi. Firstly, should search for Vivi and charge him of the fraud, which he
committed, but since he has fled the country the possibilities to find him has turn to the
next of impossibilities. The damages to pay by who is the main concern here since Juju
made the payment to Vivi and not receiving anything in return is purely a loss. Though
on the other hand Timber supply limited could have been more professional having
stated on the receipt only valid once the cheque has been cleared which could have
prevented the fraudster from prevailing. Both have their rights to argue in court and we
think both the parties are equally balanced and it will be up to the judge to give the final
verdict and give the right decision.

(1587 Words)

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5.0 Referencing

1- Denis Keenan & Sarah Riches, 1998, Business Law, 5th edition, Great Britain, Pearson
Education Limited.

2- P.S Atiyah, John N.Adams & Hector Macqueen, 2001, The Sales of Goods, 10th
edition, United Kingdom, Pearson Education Limited.

3- Lee Mei Pheng, 2004, General Principles of Malaysian Law, 4th edition, Malaysia,
Penerbit Fajar Bakti Sdn Bhd.

4- Elliott C., and Quinn F., (2005), Contract Law, 5th edition, England, united Kingdom,
Person education

5- Furmston M, (2007). Cheshire, Fifoot’s and Furmston’s Law of contract, fifteenth


edition. Great Britain, Oxford University Press

6- Lee K.Y., and Tabalujan B.S., (1999), The Executive Guide to Business and The
Law, 2nd edition, England, UK, Person Education.

7- Jordan, D., 2007, Contracts - Genuineness of Consent [online], Los Angels, Mission
College, Available from: http://profj.us/wlac/assent.htm [Accessed 5th May 2009]

8- Tufal, A. , 2006, Contract Law [online], United Kingdom, a-level-law.com, Available


from: http://www.a-level-law.com/ [Accessed 19th May 2009]

9- Miller, T., 2008, Misrepresentation [online], United Kingdom, economic-truth,


Available from: http://www.economic-truth.co.uk/cima/notes/law05.pdf [Accessed
20th May 2009]

10-Ayres, I., 1993, Mutual and Unilateral Mistake in Contract Law [online], United
State, Yale Law School, Available from: http://islandia.law.yale.edu/ayres/mutual.htm
[Accessed 21th May 2009]

11-HMSO and the Queen's Printer , 1st October 2003 [Online], Scotland, Available from:
http://www.johnantell.co.uk/SOGA1979.htm(SOGA) [ Accessed 22th May 2009]

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6.0 Appendix

Components of formation of contract would include:

Certainty

S.30 CA 1950 provides that agreements, the meaning of which is not certain, or capable of
being made certain are void.

The terms of agreement cannot be vague but must be certain.

Capacity to contract

The parties entering into a contract should also be competent to contract i.e. they must have
legal capacity to do so.

S.10 (1) all agreements are contracts if they are made by the free consent of parties competent
to contract, for a lawful consideration and with a lawful object, and are not hereby expressly
declared to be void.

Contractual terms

The contracts act 1950 is silent with respect to terms of contract. The question as to whether a
statement is a term or representation of a contract is left open to the construction of the court.

Vitiating factors in a Contract

Fraud

S.17- fraud includes any of the following acts committed by a party to a contact, or with his
connivance or by his agent, with intent to deceive another party thereto or his agent, or to
induce him to enter into a contract. [Weber v Brown]

Misrepresentation

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Defined to a certain false statements made by a representor and which induces the other party
to enter into a contract.

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Coercion

s.15 CA – defines “ coercion “: is the committing, or threatening to commit any act forbidden
by the Penal code, or the lawful detaining or threatening to detain, any property, to the
prejudice of any person whatever, with the intention causing any person to enter into a
contract.

Cases:

Cundy v Lindsay (1978)

A swindler named Blenkarn odered some goods from the plaintiffs in a letter in which
he signed his name to resemble that of Blenkiron & Co, a firm known to the plaintiff.
Although the address of Blenkarn was not the same as that of Blenkiron & Co, they were
both in the same street. The plaintiff, without noticing the discrepancy in the street number,
despatched the goods to Blenkarn, who promptly disposed of them to the defendants, who
bought in good faith and for value.

Held: There was no contract existed between the plaintiff and Blenkarn, and the case had to
decided as though Blenkarn had stolen the goods; at no stage had the plaintiff voluntarily
decided to entrust the possession of their goods to Blenkarn. [Source 4]

Shaw v Commissioner of Metropolitan Police (1987)

Plaintiffs agreed to buy a car from one L who had obtained it from the true owner,
together with a certificates signed by him saying that he had sold the car to L. In fact, this
was untrue; as the owner had not sold, the car to L- He had merely authorized L to sell it on
his behalf. L was a swindler who did not pay for the car, and when suspicions were aroused,
he disappeared, leaving to the title to the car in doubt.

Held: The Court of Appeal denied the plaintiff’s claim; though on the rather unsatisfactory
ground that s.21 did not apply where the buyer had merely agreed to buy the goods but only
where he had bought them. Plaintiff’s claim failed because they had not acted to their
prejudice since they had not paid the price. [Source 3]

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Lewis v Averay (1972)

Lewis was a postgraduate student and wanted to sell his car - a Mini Cooper S. He
placed a newspaper advertisement offering it for sale at £450. A person telephoned and
arranged to see it, and took it for a test drive. He said he was Richard Greene - a well-known
actor (used to play Robin Hood - very appropriately). He wanted to give a cheque for the
£450. Lewis quite sensibly asked for identification. He had shown a Pinewood Studio's pass,
and was then happy to take the cheque in return for the car. It turned out that the cheque and
other documents had stolen. The car was subsequent sold on to Averay who purchased it for
£200. Lewis now sues Averay for conversion. Was there a contract of sale under which the
property passed from Lewis? If there was no contract - for example because any purported
contract was void ab initio, then Averay could not claim good title as the rogue would have
had none to pass on. Clearly, Lewis was mistaken about the rogue's identity. There are two
cases, which cannot be reconciled. [Source 1]

Pearson v Rose & Young (1951)


The plaintiff delivered his car to X, a mercantile agent, in order to obtain offers, but
with no authority to sell it. The agent obtained possession of the registration book by a trick
in such circumstances that the owner had clearly not consented to parting with the possession
of it and the promptly sold the car, as he had intended to do from the first.

Held: The Court of Appeal held that the question whether the agent had committed larceny
by a trick was quite immaterial and that in each case the only question was whether the goods
were in his possession with the consent of the owner, but not of the registration book.

Newton of Wembley LTD v Qilliams (1965)


The plaintiffs sold a car to A, who paid by cheque. Although he was given possession,
it was agreed that the property would not pass until the cheque was honoured. The cheque
was dishonoured but A had resold the car to B who bought it without knowledge of the
position. B resold it to the defendant. The plaintiffs tried to recover the car from him.

Held: A, original buyer, was in possession with the consent of the owner. Hence, he could
pass a good title to B, who in turn transferred it to the defendant. The defendant was,
therefore, entitled to keep the car. [Source 2 ]

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Assignment
Group Activities Log Report

Members: 1) Syed Muhammad Asim (TP 018321)

2) Chong Moon Yee (TP 018573)

3) Ziyad Khalid (TP 015382)

4) Esther Henry Shilla (TP 018026)

FIRST MEETING

Date : 29 April 2009 (Wednesday)

Time : 12.40pm

Location: Syndicate Room, TPM Main Building Level 2

Proceedings:

12.40pm – 1.00pm Read and discuss on the question generally.

1.00pm – 1.45pm Divided task and responsibility to group members.

SECOND MEETING

Date : 15May 2009 (Friday)

Time : 12.30pm

Location: Discussion Room, Enterprise 3

Proceedings:

12.30pm – 1.20pm Discuss the materials that have been research from members.

1.20pm-2.00pm Elaborate and determine the best point.

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THIRD MEETING

Date : 22 May 2009 (Friday)

Time: 12.30pm

Location: Discussion Room, Enterprise 3

Proceedings:

12.30pm – 1.15pm Discuss about similar cases

1.15pm – 1.45pm Correction on the works without missing any information

FOURTH MEETING

Date : 29 May 2009 (Friday)

Time: 12.45pm

Location: Syndicate Room, TPM Main Building Level 2

Proceedings:

12.45pm – 1.20pm Combine and arrange work done by members

1.20pm – 1.40pm Double checking the grammar and report before ready to submit.

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Workload Matrix
Group Members:

Area of Responsibility Name and Signature


of Member

1) Elaborate point for body and typing


2) Research for similar cases Chong Moon Yee
3) Monitor the progression of the report (TP 018573)

1) Write draft for body


2) Documentation of introduction Syed Muhammad
3) Documentation for Conclusion Asim
(TP 018321)

1) Research of related issue


2) Write workload matrix Ziyad Khalid
3) Online research ( TP 015382)

1) Write group activities log report


2) Formatting of the report Esther Henry Shilla
3) Research books (TP 018026)

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