Question 1 (25 marks)

Linda is the founder and CEO of the company Lone Sun which ran a social media website with over 1 million registered users. The website had been elected as one of the most trusted medical reference websites in 2018. In April 2019, Linda had been approached by David, a representative of a company named Global Cure for collaboration. Under the proposed project, Lone Sun would have the right to exclusively distribute, sell and market the drug Tedroin that had been manufactured by Global Cure and also protected by patent and know-how owned by Global Cure. Linda was persuaded when David emphasized on the business value of these patents. Both sides soon proposed major terms in negotiation and decided that a formal contract for collaboration purpose would be made in October 2019.

Meanwhile, omitted by David during the negotiation was the fact that Global Cure had been involved in a major litigation for over a year and the judgment was delivered in July 2019. According to the judgment, Global Cure was no longer the patent owner of Tedroin, which meant that it must spend on license fee, an uncertain amount, to the new patent owner of Tedroin. Lone Sun finally concluded the contract with Global Cure in October 2019 without knowing the judgement.

1. (a) It turned out that the license fee requested by the new patent owner for Tedroin was unexpectedly high. It was foreseen that the project would hardly generate any profits. After knowing the loss of patent of Tedroin and the true position of the project, Lone Sun intended to sue based on misrepresentation.

   Required:

   Discuss whether the conduct of David constitutes misrepresentation. You are required to cite a relevant case to support your answer but do NOT need to discuss the different types of misrepresentation. (19 marks)

2. (b) Suppose there was a term in the contract Lone Sun and Global Cure signed in October 2019, which provided, If in case the number of registered users of Lone Suns website drops below 0.5 million, this contract would end automatically. (The scenario in this part is independent from that of 1(a).)

   Required:

(i) Assume the current number of registered users of the website is 0.4 million, discuss whether the contract between Lone Sun and Global Cure can be discharged and in what way. (3 marks)

(ii) Describe the other ways to discharge a contract apart from that in 1(b)(i).

(3 marks)

[End of Question, Total for Question 1: 25 marks]

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Question 2 (25 marks)

After her mother passed away a year ago, Emily moved into a smaller apartment in the New Territories with her mentally ill father Mr. Wong. Due to his mental problem, Mr. Wong had difficulty getting along with his new neighbours because he believed that all strangers were thieves and could not be trusted. Shortly after they had moved into their apartment he tried to attack the neighbour living next to them with his umbrella when the young man waved to him to greet him. Fortunately, Emily stopped him from doing so just in time and the young man was not hurt. Emily was on annual leave four months ago. When she was preparing breakfast in the kitchen one morning, her colleague Peter called her to ask where she had kept the flash disk containing important information about a new project Emily was working on. As Emily took the flash disk with her during annual leave, she asked Peter to come to her apartment to pick it up and Peter agreed. When Peter was sitting in the living room drinking a cup of coffee made by Emily, it suddenly occurred to Emily that she had to buy some drugs for her father from the pharmacy nearby. She asked Peter to enjoy his coffee and told him that she had to do some shopping and would come back in 15 minutes. Emily then left her apartment in a hurry, leaving Peter alone with her father who was sleeping in his bedroom. Just after Emily had left her apartment, Mr. Wong woke up and walked out of his bedroom to look for Emily. When Mr. Wong saw Peter, he was very upset because he believed Peter was a thief who had broken into his apartment. He immediately picked up a folding chair he found in the living room and attacked Peter with it. As Peter was sitting on the sofa with his back to Mr. Wong, he could not see Mr. Wong and was seriously injured by the folding chair.

When Peter was recovering from his injury at Good Health Hospital, a nurse mistakenly gave him an overdose of painkillers, which caused Peter to fall into a coma. Although Peter subsequently regained his consciousness, he had to stay for two more months in hospital.

Required:

(a) Discuss whether Peter is entitled to take legal action against Emily for his injury on the grounds of negligence in tort. You are required to cite a relevant case to support your answer. (19 marks)

(b) Discuss whether Peter is entitled to claim damages from Emily for his additional two months stay in hospital after falling into a coma. (6 marks)

Question 3 (15 marks)

Richard Wong was the Marketing Manager of Attractive Beauty Company Limited (ABC). The business of ABC was in trading and marketing skin care products and machines. Under the employment contract, Richard could buy skin-care products on behalf of ABC if the amount of the contract is below HK$50,000. He was forbidden to purchase any skin care machines unless there was an approval from the Chairman of the board of directors. Recently he had signed two contracts with different suppliers.

Last Monday, the sales director of Marcelin Skin, a famous brand selling skin-care products, visited ABC. Richard regularly placed orders with them. The sales director offered Richard a special discount of their new anti-aging skin-care products if the order was over HK$100,000. Richard immediately signed a contract worth HK$120,000 on behalf of ABC with Marcelin Skin.

Last Wednesday, he signed a HK$45,000 contract on behalf of ABC with another supplier called Photon Scrubber Limited (PSL) and bought 10 sets of oxygen skin treatment machines. This had been approved by the Chairman of the board. However, unknown to the board of directors of ABC, PSL was solely owned by Richard.

Required:

(a) Discuss whether ABC would be bound by the contract signed by Richard with Marcelin Skin. You are required to cite a relevant case to support your answer. (8 marks)

(b) Discuss whether Richard would be liable for any profits he made from the contract with PSL. You are required to cite a relevant case to support your answer. (7 marks)

[End of Question, Total for Question 3: 15 marks]

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Question 4 (15 marks)

Ada and Betty were partners in AB Production Co. Their main partnership business was to design and film TV advertisement. Ada and Betty had been working together for five years and they maintained an excellent working relationship. Recently, Bettys younger brother, Ricky, had returned to Hong Kong to set up his own firm. The firm also operated TV advertisement business as AB Production Co. did. In order to help his brother, Betty introduced some clients of AB Production Co. to him. She also highly recommended Rickys favourable terms to the clients and this caused AB Production Co. to lose 20% of their jobs and revenue. Furthermore, Betty had injected capital into Rickys firm and became a partner of Ricky. Betty never mentioned anything about her brother Ricky to Ada.

Required:

Explain whether Betty breached any duty(ies) as a partner of AB Production Co. and discuss the consequences, if any. (15 marks)

[End of Question, Total for Question 4: 15 marks]

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Question 5 (20 marks)

Thomas had recently twisted his ankle in a basketball match. While recovering, the doctor advised that he had to wear shoes with tailor-made cushioning or insole to protect his foot.

Thomas went to a footwear store Super Shoes to buy a pair of running shoes. On the shoe rack he saw a latest arrival named Thunder Speed. His favorite basketball player Jack Dickon acted as the brand ambassador for Thunder Speed. Being fascinated by the stylish design of the shoes and Jack being the ambassador, Thomas had soon forgotten about the doctors reminder. He took out his credit card and placed order for a pair of Thunder Speed shoes immediately.

Last Saturday, Thomas had worn Thunder Speed in a running exercise. Unfortunately, the wound of his ankle worsened just after he started to run fast. Thomas was in a severe pain and could hardly walk. He had to bandage up his foot and use a wheelchair for one month. It was later found that Thunder Speed was not recommended for people with an injured ankle.

Required:

1. (a) Advise whether Thomas has the right to claim against Super Shoes for breach of the implied term as to fitness for a particular purpose under s16(3) of the Sale of Goods Ordinance (Cap. 26). You are required to cite a relevant case to support your answer.

   (12 marks)

2. (b) SupposewhenThomasplacedtheorderforThunderSpeed,SuperShoeshadmadeknown to Thomas that the shoes were out of stock and the shop promised and was legally bound to deliver the shoes to Thomas within one week. However, the shoes did not arrive within one week due to a delay in shipment. Advise whether Thomas was entitled to cancel the order for the shoes and demand a refund. (3 marks)

3. (c) The Sale of Goods Ordinance is an example of a statute law. Explain the meaning of statute law and the advantages of having statute law over common law and equity.

   (5 marks)

   [End of Question, Total for Question 5: 20 marks]