12-87. Alfred Tan, sued his business partner Branson Young for loss of business opportunities in setting up the butchery business and losses as a result of Young’s bad business decisions.

Alfred sued Branson on the following issues:

a. Branson sold a mincing machine which was frequently used to mince meat for corporate clients.

b. Branson was not cooperative, which resulted in the loss of partnership with the biggest supermarket chain in Singapore.

c. Branson had also sold a lorry. Alfred calculated that it resulted in a loss of $14,000.

The initial used by both parties were as follows:

Subsequently the courts awarded $151,817 for the damages and $13,000 for the damages awarded to the sale of the lorry. No damages were awarded for the loss of the potential business.
After reading the above case, respond to the following questions.
1. Explain which method you would use in this situation.
2. Explain in detail the method you would use to determine the amount of liability.
3. Explain possible reasons for the difference in how the claim values were derived.
4. Do you think the lost earnings from the partnership with the local supermarket is justifiable? Explain what further information you would require to justify the loss of earnings.
5. In your view do you think the court ruling is justifiable? Discuss what other information you would require to come to your conclusion.

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Key Assumption Alfred Used (a) Time period of claim for ex-customers (b) Time period of claim for new customers 4 years( April 2011-March 2015) 4 years (limited to those new customers Branson 1 year 4 months (April 2013-July 2014) for the period (c) Revenue growth rate of existing customers (CAGR) from April to December 2011) 21.38% (d) Revenue growth 6.20% rate of new cus- 18.15% (Did not take into account new customers) (e) Attrition Rate 20% 20% tomers (CAGR)