Jan 2016

Question 3

Owen was the owner of an office building that was built 5 years ago. The building was fully tenanted, with the tenants having signed 5-year lease agreements. Most of these agreements were due to expire within 6 months. Owen had a gut feeling that they would not be renewed by the tenants, although they had not said anything to Owen yet. There were newer office buildings nearby and their rental rates appeared very competitive.

Apex Investment Fund (AIF) wanted to purchase the office building from Owen. They told Owen that the rental income from the office building would be a good way to diversify their revenues. When AIF went to meet Owen and inspect the office building, they were impressed with the location of the building. AIF asked Owen about the tenants and the condition of the building.

Owen replied, "The building is fully tenanted. I think the condition of the plumbing and wiring for all the offices is still top-notch." He was very unwilling to discuss more about the tenants as he did not want AIF to know that there is a possibility that some of the tenants might not renew their leases. Unknown to Owen, the plumbing and wiring also had deteriorated badly due to poor workmanship during the construction and fitting out stages.

Satisfied with the answers, AIF signed the contract with Owen to purchase the office building. Two weeks later, AIF found out from many tenants that they do not intend to renew their lease agreements when these expired within the next few months. In addition, AIF's internal surveyor went to survey the building and found issues with the wiring and plumbing within the building.

AIF was furious and wanted to void the contract immediately.

Based on the statements made by Owen, define and identify one (1) possible ground on which AIF could rescind the contract. Analyse and describe whether AIF would be able to successfully void the contract. Support your analysis with reasons and case law. (25 marks)

Question 4

Orange is a fashion apparel retail chain. For the upcoming Chinese New Year, it decided to order 1,000 trendy cheongsams from Fine Dresses Limited, a China manufacturer of fashion apparels.

These silk cheongsams were specially embroidered by hand and had semi-precious stones sewn onto them. Orange emphasized to Fine Dresses that the delivery date is very important as it was planning their year-end Christmas marketing campaign around this delivery date.

Fine Dresses agreed to deliver the cheongsams to Orange by 1 November. In anticipation of the delivery, Orange conducted a massive marketing campaign within

Singapore, with billboards, TV and newspaper advertisements and social media postings, with each cheongsam being advertised at a sale price of S$100.

A multi-national corporation saw the advertisements and placed an order with Orange for 200 cheongsams as corporate gifts. They were prepared to pay S$300 per cheongsam. Hence, Orange placed an order for 200 more cheongsams with Fine Dresses but with the same delivery date.

Fine Dresses failed to deliver the cheongsams by 1 November. Orange kept sending emails to chase Fine Dresses but the latter still failed to deliver the cheongsams by Christmas. As of end December, Orange decided to sue Fine Dresses on the basis of breach of contract.

Advise Orange as to whether it would be able to claim for damages. In your analysis, you should explain and discuss the four (4) aspects of damages. Support your analysis with reasons and case law. (25 marks)