PSK PS02 Opinion Letter

To: CEO of Golden Phoenix Construction (GPC)

1. We refer to our meeting held on the 28th of July, 6pm at our offices.
2. This letter will summarise the facts that were discussed in our meeting,
followed by our legal opinion on the matter.
Facts
3. Super Blinds (SB) has been one of GPCs suppliers of customised
blinds for more than 20 years.
4. SB supplies blinds for a construction project between GPC and a
developer in Shanghai.
5. You have been informed by a developer in Shanghai to pay out
$50,000 liquidated as a result of faulty blinds supplied by SB.
6. In addition to the $50,000 liquidated damages, the Shanghai developer
has also removed you as the main contractor for the guesthouse annex
to the main project. This has caused a loss of profit of $200,000 to
GPC.
7. Your investigations have revealed that the order of blinds that were
used in the Shanghai development had a defect rate of 10%, higher
than SBs usual manufacturing defect rate of 2%.
8. The standard defect rate in the industry is 5%.
9. An angry email was sent to the CEO of SB, complaining about the
defective blinds and refusing to pay for their delivery on the basis that
they should be compensating you the $50,000 liquidated damages and
$200,000 loss of profit.
10. SB responded by halting the delivery of the second half of the blinds.
11. You seek for SB to deliver the second batch of blinds, and the
replacement blinds as soon as possible.
12. In the event that SB does not deliver the second batch of blinds, and
replacement blinds, your losses would amount to an additional
$150,000 to manufacture the second batch of blinds, and another
$15,000 to manufacture replacements for the defective blinds.
13. You would also like to be compensated for the loss of profits and
recover the $50,000 liquidated damages paid out to the Shanghai
supplier.

14. You are open to alternative methods to resolve this dispute.

Summary of Advice
15. Based on the facts stated above, we believe that SB has breached its
contractual obligations to you, and would be liable for the damages
incurred as a result of its breach.
16. We advise that a letter of demand be sent to SB, requiring the delivery
of the second half of the blinds to the developer in Shanghai, or
requiring SB to pay damages of $150,000 incurred as a result of SBs
breach of contract to deliver the 2nd batch of blinds. This is to ensure
that your current project with the Shanghai developer can proceed
smoothly.
17. Please advise if you would like us to proceed to draft a letter of
demand to SB.
18. We advise further that negotiations between you and SB be conducted
immediately in order to secure payment for the other damages incurred
as a result of the breach of contract between SB and you.
19. Please advise if you would like us to arrange a negotiation with SB and
their solicitors.
20. In the event that negotiations do not yield favourable results, we would
then advise for legal action to be taken, and a lawsuit filed for breach of
contract.
21. Legal action would allow the Court to enforce payment of damages to
you. However, it must be said that the litigation process would be costly
and time consuming, and further sour your long-standing business
relations with SB. Hence, we advise that litigation only be taken as a
last resort.
Causes of Action
Breach of Contract
22. SB is liable for breach of contract
Defences
No Defences Available for SBs breach of contract
23. SB would not be able to raise any defence against their breach of
contract.

Remedies
Specific Performance: Delivery of the 2nd batch of blinds
24. We refer to Paragraph 10 of this letter stating that your main concern
would be to secure the delivery of the 2nd batch of blinds.
25. However, the delivery of the 2 nd batch of blinds would amount to a
specific performance of SBs contractual obligation, and is usually only
awarded in exceptional cases. Exceptional cases typically involve
cases where monetary damages are an inadequate remedy, should the
contractual obligation not be performed.
26. In your current case, monetary damages would be sufficient to remedy
the breaches of contract by SB, and hence, you would not have the
legal right to demand SB to the deliver the 2nd batch of blinds.
Damages
27. Although it would be difficult to secure the specific performance of SBs
contractual obligations, SBs breach of contract would entitle you to
claim the following damages from SB:
a. Loss of profit ($200,000);
b. Liquidated damages ($50,000);
c. Etc.
Qualifications
28. The laws stated in this letter are limited to the law as it stands at the
time or writing.
Assumptions
29. The advice tendered in this letter were made based on the assumption
that all documents, representations, descriptions and statements made
were complete, accurate and true.
Conclusion
30. The paragraphs above briefly set out your legal position and possible
routes you can take.
31. Please feel free to contact us for further clarification.