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)