Law Question

Mark saw an advertisement in the newspaper: "Caf at Supermall for takeover. Cheap: $50,000. 30 metres away from the subway station. High human-traffic. Call: Judy XXXX." He was interested and contacted Judy to arrange a meeting at the caf on 20 September. On the day of the meeting, Mark saw a lot of people coming from the subway station walking past the shop. He noticed that the shop assistant was busy serving the customers and the caf business appeared to be doing well. Therefore, he thought that it was reasonable for the caf to have a high rental. When he asked Judy about business at the shop, she replied, "Yea, it's a goldmine!" Mark then asked for some time to consider and Judy gave him two weeks. She would be away and won't be contactable till then as she was going for a mountain trek on her trip to Nepal. There is no service as she goes higher up at the mountain.

At the same time, the shop assistant had been asking Judy for a $1,000 bonus since the cafe's business had done so well. But Judy did not feel that the shop assistant deserved one. Moreover, the shop assistant's employment contract did not guarantee a bonus; it was for Judy to decide. On the eve of Judy's trip, the shop assistant demanded that either Judy give her the bonus or she will not turn up for work from the next day on. Judy asked her sister to mind her shop while she was in Nepal but to no avail as her sister had a tight working schedule. With that, she reluctantly agreed to pay the bonus to the shop assistant .

The shop assistant ran the shop in Judy's absence but she was slacking throughout the job. Supermall's management placed a notice calling for an urgent meeting with all tenants (or their representatives) in every shop unit's physical mail-box but the shop assistant did not follow Judy's instructions to check the mail-box every day and to place all mail for Judy's sister to collect in the evenings. The notice was overlooked and no one went to the meeting in Judy's place on 26 September. At the meeting, the management informed all tenants that the passage linking to the subway station would be closed for one year because of construction work on a neighbouring site. The link-way would be closed from 1 November and reports of the closure appeared in the newspapers on 27 September.

On 2 October, Judy returned home from her trip. The next day, her sister informed her about what the press reported and didn't pay attention as she was too jet lagged. She went back to the cafe on the same day and received a call from Mark saying that he decided to take over the business including the lease of the shop, at the advertised price from 16 September. The following week, a written agreement was signed. There was no express reference to the human traffic or the link-way during their discussions on 20 September and thereafter. The written contract was similarly silent. The lease of the shop would run for another 18 months. Mark took over on 15 October and was happy as business was good. However, he was angry when profits decreased by 80%, with the closure of the passage link taking place on 1 November.

He called Judy several times but no one picked up the calls. The sales were poor. After trying every day for a week, Mark gave up calling. On 14 December, Mark was doing a stock-take (only about 10% of the original stock had been sold), and he saw a document in the storeroom which contained Judy's address. He immediately went to her house and wanted his money back.

The following clause was in the agreement between Mark and Judy:

Clause 5: The vendor and purchaser agree that the terms and conditions in this Agreement represent the entire agreement between the parties.

Required:

(1) Advise Mark if he could return the business to Judy, recover the purchase price he had paid and claim any losses he suffered.

(2) When Judy sold the business, she had followed the terms in the employment contract and paid the shop assistant one month's salary in lieu of notice, to terminate the employment. The shop assistant then reminded Judy about the $1,000 bonus, which Judy refused to pay. Advise Judy if she is entitled to refuse.