LAW299 Answer Scheme PDF

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1ANSWER SCHEMEQUESTION 1:Nadine owns a hipster cafe in Putatan. As Nadine is going overseas for three weeks, she instructedher assistant, Aleeya, to manage the cafe while she is away. A week after Nadine left, a fire broke out in the shop next to her cafe and the fire spread to her cafe, causing dam...

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ANSWER SCHEME QUESTION 1: Nadine owns a hipster cafe in Putatan. As Nadine is going overseas for three weeks, she instructed her assistant, Aleeya, to manage the cafe while she is away. A week after Nadine left, a fire broke out in the shop next to her cafe and the fire spread to her cafe, causing damage to the kitchen. Aleeya tried to contact Nadine but failed to reach her. As an effort to reduce losses, Aleeya sold off the food stock which was partially damaged in the fire at a lower price. She also sold off some chairs in the cafe although the chairs were not affected by the fire. When Nadine returned, she was upset to discover what Aleeya did. She wants to know if she can make Aleeya responsible for her losses. Advise Nadine. Introduction: 2 marks Definition of contract of agency. Creation of agency – by necessity, i.e. by operation of law in certain circumstances, OR Duties of an agent. Issue: 2 marks Whether Nadine can make Aleeya liable for all losses that she has suffered? Law: 12 marks Creation of agency by necessity • Section 142 of the Contracts Act 1950 • There is an emergency where the agent has to act without the principal’s instructions • The agent could not reach the principal for instruction • The agent could not wait for the principal’s instructions • For instance, a fire or flood where damage to property and/or loss of life or injury to persons may occur • Three conditions to be met for the creation of an agency by necessity: (a) It is impossible for the agent to get instructions from the principal. Springer v. Great Western Railway Company [1921] 1 KB 257. (b)

The agent’s action is necessary, in order to prevent loss to the principal with respect to the interest committed to his charge. Great Northern Railway Co v. Swaffield [1874] LR 9 Ex 132.

(c)

The agent of necessity must have acted in good faith. - cannot sue the agent even if he suffers losses

Application: 7 marks Based on the question, Aleeya sold off the food stock which was partially damaged in the fire at a lower price. She also sold off some chairs in the cafe although the chairs were not affected by the fire. Thus by applying the three conditions above, Nadine can make Aleeya liable only for the chairs she sold, because they were not affected by the fire. Thus Aleeya cannot claim that she is an agent by way of necessity or emergency. Conclusion: 2 marks

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QUESTION 2: Frozen Snowman Sdn Bhd (the company) is a well-known furniture company. Olaf, who operated a tuition centre, purchased 20 chairs and 20 tables from the company. He was given a credit period of 30 days. The company delivered 20 chairs and promised to send the 20 tables as ordered by Olaf at a later date. However, Olaf failed to pay after the credit period expired and as a result Frozen Snowman Sdn Bhd refused to deliver the 20 tables which Olaf ordered. Olaf claimed the other 20 tables which he has ordered that had not been delivered by the company to him. The company refused to deliver the 20 tables and requested payment for the 20 chairs. Advise Frozen Snowman Sdn Bhd. (25 marks) Introduction: 2 marks Definition of Sale of goods Issue: 2 marks Rights of unpaid seller. Whether Frozen Snowman Sdn Bhd can sue Olaf for the unpaid 20 tables? Whether Frozen Snowman Sdn Bhd has the right not to deliver the unpaid 20 tables? Law: 12 marks • • • • • • •

S.55 SOGA 1957 – seller may sue for the price. This applies even if the property in the goods has not passed and the goods have not been appropriated to the contract. There are overlapping rights under s.55 SOGA 1957 and s.56 SOGA 1957. The effect of this is that the seller has an option to either sue for the price under s.55(1) SOGA 1957 or for damages under s.56 SOGA 1957. S. 45 SOGA 1957 – A seller is deemed to be an ‘unpaid seller’ in 2 situations: S.45(a) SOGA 1957– when the whole of the price has not been paid or tendered, or S.45(b) SOGA 1957– when a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise. S.46(1) SOGA 1957 – The unpaid seller is possessed of 3 rights against the goods given under law irrespective whether the property in goods has passed to the buyer: • S.46(1)(a) SOGA 1957– The unpaid seller has a lien on the goods for the price while he is in possession of them; • S.46(1)(b)SOGA 1957 – In the case of the insolvency of the buyer, the unpaid seller has a right of stopping the goods in transit after he has parted with the possession of it; • S.46(1)(c) SOGA 1957– The unpaid seller has a right of resale as limited by the Act.

Application: 7 marks: Based on the question, Olaf failed to pay after the credit period expired and as a result Frozen Snowman Sdn Bhd refused to deliver the 20 tables which Olaf ordered. Olaf claimed the other 20 tables which he has ordered that had not been delivered by the company to him. The company refused to deliver the 20 tables and requested payment for the 20 chairs. By applying section 55, 45 and 46(1)(a), Frozen Snowman Sdn Bhd has the right to exercise lien. Thus the company has the right to not deliver the unpaid tables and chairs. The company can also exercise its right under Section 46(1)(c), which is right to resell the unpaid items to a third party. Conclusion: 2 marks

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QUESTION 3: Discuss the legal positions in the following situations with reference to the Hire Purchase Act 1967: a) Azim Ikhwanul Amir entered into a hire purchase agreement with Paul Zydaen Finance Bhd for the purchase of a computer. Three months later, he decided to terminate the agreement and buy a notebook instead. The company insisted that he could not terminate the contract and demanded he pays for the computer in full. (9 marks) Answer: • Definition of Hire Purchase Agreement (2 marks) • Explain Section 15 and its application. (4 marks) • Apply it to the question: Azim Ikhwanul Amir has the right to terminate the agreement by virtue of Section !5 of the Hire Purchase Act 1967 (3 marks) b) Khirol Elmer entered into a hire purchase agreement with Reffley Zul Finance Bhd for the purchase of a car. Khirol Elmer is now being transferred from his office in Johore to Sarawak. He informed the finance company that he will be bringing the car with him to Sarawak. The company refused to allow him to do so unless he paid a processing fee of RM200. (9 marks) • Answer: • Definition of Hire Purchase Agreement (2 marks) • Explain Section 11 and its application. (4 marks) • Apply it to the question: Khirol Elmer has the right to remove the car from Johore to Sarawak pursuant to Section 11 of the HPA. (3 marks) c) Niki Nadila signed an agreement with Rachel Pfeiffer Finance Bhd for the purchase of a sewing machine under hire purchase. To speed up the process, Niki Nadila was asked to sign the agreement before it was duly completed. (7 marks) Answer: • Definition of Hire Purchase Agreement (1 mark) • Explain Section 4B makes it compulsory for all parties to the agreement to sign them o The owner/dealer/agent cannot require the hirer to sign an agreement that is blank or incomplete o Section (2A) states that the owner cannot deliver to any dealer, agent or person acting on behalf of the owner a hire-purchase agreement or any other form or document relating to a hire-purchase agreement which has not been duly completed o The agreement will be void and the owner or dealer/agent commits an offence (4 marks) • Apply it to the question: The HPA signed by Niki Nadila is void by virtue of Section 4B (2A) of the HPA 1967 (2 marks)

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