Answer Scheme BWB2013 - Business Law Special Examination Semester October 2004 Part 2

ANSWERS SCHEME (Note: This answer scheme should be read with the question paper for BWB2013 Business Law Special Examination Semester October 2004 Part 2) SECTION A: MULTIPLE CHOICE (30 MARKS) 1. C 2. D 3. B 4. D 5. D 6. C 7. B 8. C 9. C 10. C 11. B 12. D 13. A 14. A 15. C 16. C 17. A 18. A 19. A 20. C 21. C 22. D 23. C 24. A 25. A 26. B 27. D 28. A 29. C 30. D

Proof read by: Zuraimy b. Abd. Ghani ( Director of K-Force Program )

Answer Scheme BWB2013 - Business Law Special Examination Semester October 2004 Part 2

SECTION B: ESSAY (30 Marks) Answer any TWO questions. Support your answer with legal principles, rules of common law and decided cases applicable Question One (Proposed Answer) Advise Sarah whether she had a contract with Linda or not for the sale of the antique chair. (15 Marks) o o The display of a rare teak wood chair is an invitation to treat Sarah made an offer to buy the chair from Linda for RM850, however Linda made a counter-offer to accept such offer if Sarah agrees to pay her RM1000 Sarah made a valid acceptance immediately after she went home and this acceptance she made by post. By virtue of Section 4(2)(a) of the Contracts Act 1950 & cases of BRYNE V VAN TIEN HOVEN or IGNATUIS V BELL an acceptance is complete against the offeror when the acceptance is posted. Moreover Sarah made the acceptance within the time stipulated Linda had breached the contract because she had sold the chair to Sarahs cousin.

Question Two (Proposed Answer) Advise the parties concern in relation to law of negligence (15 Marks) o Malik had ignored the advice from his instructor to slower pace of the car, it means that he himself had a duty of care against the other road users and he had breached that duty because Adrina was injured due to that breach of the duty. Malik will liable for his negligence against Adrina. As this principle was established in case of DONOUGHUE V STEVENSON. Pn Zarina as Adrinas mother suffered nervous shock due to her seeing her daughter hit by Malik. Malik will be liable for the injury sustained by Pn Zarina i.e. by nervous shock as she and Adrina has special or close relationship and despite there was a physical proximity in term of time and space, so her injury is something that is foreseeable as consequence of Maliks negligence. The principle had been laid down in case of MC LOUGHLIN V OBRIAN. Sai Yuk as Maliks instructor also injured due to that accident, but that material time he was not wearing the seat belt. In this situation, Sai Yuk is vicariously liable by referring to Section 12(1) of the Civil Law Act 1956 and case of JONES V LIVOX QUARRIES LTD.
Proof read by: Zuraimy b. Abd. Ghani ( Director of K-Force Program )

Answer Scheme BWB2013 - Business Law Special Examination Semester October 2004 Part 2

Question Three (Proposed Answer) In relations to the Sale of Goods Act 1957, advise Fortune Sdn. Bhd. (15 Marks) o According to Section 14(a) of SOGA there is an implied term that seller has the right to sell the goods- and the case of ROWLAND V DIVALL. By referring to those section and case, Fortune has a right to repudiate the contract and they can refund their money from Saddam as they were bona fide purchasers without notice. Desco has the right to return all of the desks and to a full refund of the contract price. Authorities to support the case are Section 15 of SOGA and cases of ARCOS LTD V E A RONAASEN & SONS and MOORE & CO and LANDAUER & CO.

Question Four (Proposed Answer) Advise Joe, Murray, David, Brian and Ernie as to whether they would be liable if and when they are sued for customers loss. (15 Marks) o The first customer can sue for the damages against Jeo, Murray, David and Ernie. Though Joe negligently set fire to the customers house, the other partners may also be liable as the action done by Joe was in the ordinary course of the firms business- authorities are Section 12 & 14 of PA and case of HAMLYN V HOUSTON & CO. Ernie though in actual is not a partner, he has liability as a partner because his name was put alongside of all firms stationeries. This is called holding out principle as mentioned in Section 16 0f PA and in case of BEVAN V THE NATIONAL BANK LIMITED. For the second customer, he may sue David, Joe, Murray and Ernie. According to Section 13 of PA the firm will incur the loss due to one of the partner misappropriate money received in the ordinary course of business as well as in case of RHODES V MOULES .

Question Five (Proposed Answer) a) In light of the above statement and the provision of sec 16 (5) of Companies Act 1965, discuss the five (5) effects of incorporation of a company. (10 Marks) 1. A company becomes a body corporate with the power of an incorporated company has separate legal entity 2. It may be sue and be sued in its name Foss V Harbotle 3. It has perpetual succession- Re Neol Tedman Ltd 4. It may own land Macaura v Northern Assurance Co 5. The liability of the members may be limited
Proof read by: Zuraimy b. Abd. Ghani ( Director of K-Force Program )

Answer Scheme BWB2013 - Business Law Special Examination Semester October 2004 Part 2

b) Advise En. Kassim whether or not he is liable to pay the retrenchment benefits. (5 Marks) A company after its formation, it has separate legal entity from its members / shareholders. Though En. Kassim is one of the companys directors; he has no liability to pay the retrenchment benefits. This principle is laid down in case of SALOMON V A. SALOMON CO. LTD. or LEE V LEES AIR FARMING LTD. Moreover the company is a kind of private limited company, so its member has limited liabilities.

Proof read by: Zuraimy b. Abd. Ghani ( Director of K-Force Program )