Contract and Agency Law

Question 1

Ali is an ambitious hawker turned entrepreneur who is looking to expand his food court business. He has been buying up small coffee shops around Singapore, especially from elderly owners who are getting ready to retire and wish to sell their business for a profit.

Ali met with Uncle Mohan, his father's brother, who was the owner of a small coffee shop called "MOHAN" in the northern part of Singapore. Uncle Mohan was getting on in years and lamented that his children did not want to take over the business. He told Ali that he wanted to sell his coffee shop business so he could retire and travel around the world. He further said that his coffee shop was recently valued at $3 million.

Ali was excited at the idea and made an offer of $3 million on the spot to Uncle Mohan. Uncle Mohan was surprised and asked Ali if there were any terms that they needed to finalise.

Ali replied by saying, "We are family and we should trust each other. We don't need to spend money on lawyers to complicate matters with so many terms."

However, Ali tried to address Uncle Mohan's concerns by scribbling on a piece of paper the following statement:

"Uncle Mohan will sell his coffee shop (MOHAN), located at 2 Lorong Chuan, to Ali for $3 million, subject to final terms (if any) being agreed within 1 week."

Ali proceeded to sign on the piece of paper, before offering it to Uncle Mohan to sign. Uncle Mohan also signed on the piece of paper. Ali and Uncle Mohan also shook hands.

The next day, Uncle Mohan announced to all his employees, customers and suppliers that he had sold MOHAN to Ali and they should immediately start dealing with Ali. Ali also started to liquidate some of his stock investments in order to raise funds to finance the purchase of the coffee shop. However, when Uncle Mohan turned up at Ali's office two days later to execute the formal paperwork, Ali told Uncle Mohan that he no longer wanted to buy the business.

(a) Explain whether there is a valid contract between Ali and Uncle Mohan. In your answer,

you should identify and discuss the four (4) elements of a contract.

(70 marks)

(b)

Assuming that Ali and Uncle Mohan disagree on whether there is a valid contract between them, identify and discuss one (1) alternative dispute resolution ("ADR") method which you would recommend to the parties to resolve their dispute. In your answer, you should compare and contrast your recommended ADR method with litigation, and provide reasons for your recommendation. (Note to students: You are expected to conduct some research on your recommended ADR method to support your answer. However, you are not required to cite the Rules of Court.)

(30 marks)