QUESTION

Adam Bradley and Mary are business partners, of a franchise called "Best Burgers". The franchise specialises in serving excellent burgers and milkshakes, all at affordable prices. One fine day, Mary decides to modify the recipe and serve the customers, her own version of "delicious burgers" The response was overwhelming as people started to que and word spread like wildfire about this new menu. Soon word reached the franchisor, Susan Witt. She was not pleased with this modification, as it goes against the Franchise Act. The High Court of Malaysia ruled in favour of the franchisor, in the caseNoraimi bt Alias v Rangkaian Hotel Seri Malaysia [2009]. It was upheld that the franchisor is under a duty to maintain continuous control over the franchisee's operation of its business. This is to ensure that the customers enjoy the same quality of food offered from the same franchised business. This precedent has been reported. Susan Witt claims Mary has breached the laws, specifically the Franchise Act, in reference to this precedent upheld in court. Susan intends to sue both business partners.

Adam Bradley and Maryfear their business might be shut down and claim it was an innocent modification. In addition, Adam Bradley suffers from chronic anxiety. He is not in favour of court settlements due to the trauma faced when he lost his daughter in a court battle.

Adam Bradley and Mary were also looking for a someone to rent out their abandoned shop lot. They hired Liam Smith to be their agent. They specifically requested him to rent it out to teachers in the academic line, for RM2,000 a month. Liam, however, disobeys and rents it out to James, who runs an illegal business. Liam informs James the rent is RM3,000 and secretly pockets RM1,000 monthly. The contract has been enforced for three months, but without the consent of Adam Bradley and Mary.

Adam Bradley and Mary are also planning to run their own Food and Beverage company that supplies healthy snacks, with their own customised recipes. However, they are concerned about the liabilities in running a company and capital involved.

Based on the extract above, identify the relevant legal issues based on the questions below.

(a)IllustratetheFOUR(4)duties Liam Smith will have as an agent towards Adam Bradley and Mary, as principals.Explainthe consequences of Liam Smith's actions.

(b)"Adam Bradley and Mary are also planning to run their own Food and Beverage company that supplies healthy snacks, with their own customised recipes." Based on this intention,describeat least five (5) important characteristics a company ought to have which is advantageous to its existence andjustifyhow they can address their concern over the liabilities existing in running a company and capital involved.