Juju v Timber Supply Ltd- Group Assignment.doc 1

BM011-3-1 Legal Environment of Business Group Assignment

Subject : Legal Environment Business

Module Code and Title: BM011-3-1 (Group Assignment)

Submission Date : 4th June 2009

Lecturer name : AMBIKAI S. THURASINGAM

Tutor name : SURESH NAIDU A/L SADASIVAN

Group Member : Syed Muhammad Asim TP018321

Chong Moon Yee TP018573

Esther Henry Shilla TP018026

Ziyad Khalid TP015382

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Table of Contents

QUESTION..........................................................................................................4

1.0 INTRODUCTION.......................................................................................5

2.0 JUJU (PLANTIFF).........................................................................................6

3.0 Defendant (Timber Supply Ltd).....................................................................8

4.0 Conclusion....................................................................................................10

5.0 Referencing...................................................................................................11

6.0 Appendix.......................................................................................................12

Group Activities Log Report..............................................................................15

Workload Matrix................................................................................................17

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Marking Criteria

ASSESSMENT CRITERIA Allocated Given

Consistency and quality of presentation

Relevant and consistent presentation; clear intonation and

enunciation

20%

Depth of research

Use of proper research materials and credible sources for the

purpose of discussion and reasoning

10%

Overall impact/ persuasiveness

Ability to persuade the audience with the reasoning presented

10%

Documentation

Clarity and flow of presentation and the ability to consider the

issues within the constraints of the word limit; ability to support

views presented with proper reasoning; use of Harvard

Referencing method to identify the source(s) of information

40%

Others:

work must be type-written, neat and presentable; proper use of

language; presentation aids, dress code

10%

Individual contribution to team 10%

total 100%

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QUESTION

Vivi had a letterhead printed showing the name and address of a large corporation with

offices abroad. Using the letterhead, he ordered and obtained from Timber Supply Ltd a

quantity of timber. Vivi made payment by cheque. Vivi promptly resold the timber to Juju

who in good faith had bought the timber and paid full price for it. Timber Supply Ltd was

asked to deliver the timber to Juju at Juju’s place of business.

It turns out that Vivi’s cheque was not honoured and Vivi fled the country. Timber Supply

Ltd made a police report regarding Vivi’s fraud the next day and stopped the delivery of

timber.

Juju insists on the right to the goods.

You have been appointed to act for Juju (Plaintiff)/ Timber Supply Ltd (Defendant)

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1.0 INTRODUCTION

A contract is a binding agreement between two or more parties for performing, or

refraining from performing, some specified act(s) in exchange for lawful consideration.

The first requisite of any contract is an agreement (consisting of an offer and

acceptance). At least two parties are required; one of them, the offeror, makes an offer,

which the other, the offeree, accepts S.3 (A) acceptance must communicate. The agreement

will create rights and obligations that enforced in the courts. The normal method of

enforcement is an action for damages for breach of contract, though in some cases the court

may order performance by the party in default.

The mere fact of agreement alone does not make a contract. Both parties to the

contract must provide consideration if they wish to sue on the contract. This means that each

side must promise to give or do something for the other.

In this case, Vivi who is the third party has committed fraud by selling the goods to

juju of which, he was not entitled juju in good faith paid for them. However, later discovered

that Vivi had fled and Timber supply limited who took the cheque from Vivi in return for

Timbers is fraud the cheque bounced. Now Juju [Plaintiff] claims that he has the right to

goods to be delivered where as Timber supply limited [Defendant] think they have no

liability to deliver it since they never had a contract directly with juju and fraud had

discovered.

Our group has chosen to act as a defendant for timber supply limited and act as juju’s

plaintiff, and save guard his rights.

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2.0 JUJU (PLANTIFF)

The issue arises for Juju as plaintiff, who is an innocent buyer and had no idea of the

fraud, which Vivi had planned, and in good faith, he made the payment.

As the arguments, Juju has purchased the timber from Vivi. S.2 (b) Contracts Act,

when the person to whom the proposal had made signifies his assent thereto, the proposal is

said to have been accepted. A proposal, when accepted, becomes a promise. The general rule

is that acceptance must communicate to the offeror and there is no contract between both

parties when the communication did not take place. The contract existed when Juju made

acceptance to Vivi that he accepts the offer. There is no revocation before this so the contract

is a valid contract and when a proposal is accepted, it becomes a promise to be follow up by

actions. Acceptance has done in good faith by Juju.

The consideration was made between Vivi and Juju had in respect of buying timbers

he would pay money, thus the contract was formed and the delivery of timbers is subject to

be received.

Section 25 of the Sale of Goods Act (1979) states: ‘ where a person having bought or

agreed to buy goods obtains, without the consent of the seller, possession of the goods or the

documents of title to the goods, the delivery or transfer by that person, or by a mercantile

agent acting for him , of the goods or documents of title, under any sale, pledge or other

disposition thereof ; to any person receiving the same in good faith and without the notice of

any lien or other right of the original seller in respect of the goods.’ Has the same effect as if

the person making delivery or transfer were a mercantile agent in possession of the goods or

documents of title with the consent of the owners’ such section supports juju since he had no

knowledge of the lies which Vivi had promised him. Similar case of Newton’s of Wembley

limited v Williams (1964) [Source 2 page 14].

Had the juju been aware of the lies, which Vivi had told, and then precede he would have not

been an Innocent buyer and thus the favour be advantage of timber supply limited but here

happened opposite, which is in favour of Juju.

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Juju may also acquire goods under a contract, which is voidable (Example:

misrepresentation). In this case, the contract is valid unless and until it is voided . Section 23

Sales of Goods Act provides that where goods resold before the contract has been voided; the

buyer acquires a good title to them provided he buys them in good faith and without the

notice of the seller’s defects of title .This case is similar of Lewis v Averay (1972). [Source 1

page 14]

Juju had made payment in good faith before the discovery of fraud and the contract

was not void at that time when juju accepted offer by Vivi of supply of timbers so juju is

entitled to receive the delivery of timbers.

Another case supporting Juju would be King’s Norton Metal Co v Edridge. A

swindler ordered goods under a false name, which was not that of any identified third party,

and the plaintiffs despatched these goods on credit on the strength of the order. The swindler

disposed off the goods to the defendants. The Court of Appeal rejected the plaintiffs claim on

the ground that this was a simple case of a contract void, able for fraud and not a contract

wholly void. Of course, old and well-established law that goods obtained under a voidable

title and resold to bona fide purchaser cannot claim back by the original owner.

Juju shall placed at the position of bona fide purchaser and who deserves his rights on

the delivery of goods, which he purchased in good faith, and timber supply limited carries the

liability of supplying timbers. Capacity to contract achieved since Vivi and Juju both were

mentally sound and no one had any problem, which would breach the contract.

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3.0 Defendant (Timber Supply Ltd)

As the defendant, Timber supply limited whom after looking at the large

organizations letterhead, which Vivi had shown to influence them to sell their timbers to him,

but later they discovered the cheque that Vivi had given had bounced. Now the plaintiff Juju

demands his supply of timbers. Timber supply limited appeal there was no Contract at all

between Juju and Timber supply limited.

As a rule, a buyer cannot acquire ownership from someone who himself has neither

ownership nor the owners authority to sell. This rule had known as the nemo dat rule from the

phase nemo dat quod non habet (no one can give what he does not have). This rule embodied

in, S 27 of Sales of Goods Act. “where goods are sold by a person who is not their owner,

and who does not sell them under the authority or with the consent of the owner, the buyer

acquires no better title to the goods than the sellers had” .A similar case of Shaw v

Commissioner of Metropolitan Police(1987). [Source 3 page 13]

Vivi had no ownership to the timbers, which he had sold since the cheque had

bounced which was a breach in contract that clearly provides timber supply limited with no

liability to deliver the timbers to Juju.

According to the Section 17 of Contract Act, ‘Fraud’ includes any of the following

acts committed by a party to a contract, or with his connivance, or by his agent, with intent to

deceive another party thereto or his agent, or to induce him to enter into the contract. Intent to

deceive is a misrepresenting party must know that facts had falsely represented. Timber

supply Ltd can use this vitiating factor in a contract, because there is a misrepresentation by

silence occurs when a party fails to disclosed the material facts which the party knows that

material facts will affect the others interests.

According to sale by a person with voidable title S.19 (1) Contracts Act, a person may

obtain possession of goods under a contract, which is void (e.g. mistake) a void contract is, in

fact, no contract at all. A purchaser, for instance, Juju in these circumstances does not acquire

title to the goods. Therefore, cannot pass good title on to anyone else the original owner

[Timber supply limited] will be able to maintain an action in the tort of conversion to recover

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the goods or their value from a third party who had bought them in good faith. This case

happened similar of Cundy v Lindsay (1978) . [Source 4 page 13]

This contract was void since it was fraud and mistake, which did not count for any liability by

timber supply limited to deliver goods to juju.

There is clearly a breach of contract under S 12 of the Sale of Goods Act (1979) that

the seller must have the right to sell the goods. Vivi never had, so it protects timber limited

from supplying the goods to juju’s place.

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4.0 Conclusion

Since both the Timber Supply Limited and Juju were unaware of the fraud, which was

planned by Vivi. Firstly, should search for Vivi and charge him of the fraud, which he

committed, but since he has fled the country the possibilities to find him has turn to the next

of impossibilities. The damages to pay by who is the main concern here since Juju made the

payment to Vivi and not receiving anything in return is purely a loss. Though on the other

hand Timber supply limited could have been more professional having stated on the receipt

only valid once the cheque has been cleared which could have prevented the fraudster from

prevailing. Both have their rights to argue in court and we think both the parties are equally

balanced and it will be up to the judge to give the final verdict and give the right decision.

(1587 Words)

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5.0 Referencing

1- Denis Keenan & Sarah Riches, 1998, Business Law, 5th edition, Great Britain, Pearson

Education Limited.

2- P.S Atiyah, John N.Adams & Hector Macqueen, 2001, The Sales of Goods, 10th

edition, United Kingdom, Pearson Education Limited.

3- Lee Mei Pheng, 2004, General Principles of Malaysian Law, 4th edition, Malaysia,

Penerbit Fajar Bakti Sdn Bhd.

4- Elliott C., and Quinn F., (2005), Contract Law, 5th edition, England, united Kingdom,

Person education

5- Furmston M, (2007). Cheshire, Fifoot’s and Furmston’s Law of contract, fifteenth

edition. Great Britain, Oxford University Press

6- Lee K.Y., and Tabalujan B.S., (1999), The Executive Guide to Business and The

Law, 2nd edition, England, UK, Person Education.

7- Jordan, D., 2007, Contracts - Genuineness of Consent [online], Los Angels, Mission

College, Available from: http://profj.us/wlac/assent.htm [Accessed 5th May 2009]

8- Tufal, A. , 2006, Contract Law [online], United Kingdom, a-level-law.com, Available

from: http://www.a-level-law.com/ [Accessed 19th May 2009]

9- Miller, T., 2008, Misrepresentation [online], United Kingdom, economic-truth,

Available from: http://www.economic-truth.co.uk/cima/notes/law05.pdf [Accessed

20th May 2009]

10- Ayres, I., 1993, Mutual and Unilateral Mistake in Contract Law [online], United

State, Yale Law School, Available from: http://islandia.law.yale.edu/ayres/mutual.htm

[Accessed 21th May 2009]

11- HMSO and the Queen's Printer , 1st October 2003 [Online], Scotland, Available from:

http://www.johnantell.co.uk/SOGA1979.htm(SOGA) [ Accessed 22th May 2009]

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6.0 Appendix

Components of formation of contract would include:

Certainty

S.30 CA 1950 provides that agreements, the meaning of which is not certain, or capable of

being made certain are void.

The terms of agreement cannot be vague but must be certain.

Capacity to contract

The parties entering into a contract should also be competent to contract i.e. they must have

legal capacity to do so.

S.10 (1) all agreements are contracts if they are made by the free consent of parties competent

to contract, for a lawful consideration and with a lawful object, and are not hereby expressly

declared to be void.

Contractual terms

The contracts act 1950 is silent with respect to terms of contract. The question as to whether a

statement is a term or representation of a contract is left open to the construction of the court.

Vitiating factors in a Contract

Fraud

S.17- fraud includes any of the following acts committed by a party to a contact, or with his

connivance or by his agent, with intent to deceive another party thereto or his agent, or to

induce him to enter into a contract. [Weber v Brown]

Misrepresentation

Defined to a certain false statements made by a representor and which induces the other party

to enter into a contract.

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Coercion

s.15 CA – defines “ coercion “: is the committing, or threatening to commit any act forbidden

by the Penal code, or the lawful detaining or threatening to detain, any property, to the

prejudice of any person whatever, with the intention causing any person to enter into a

contract.

Cases:

Cundy v Lindsay (1978)

A swindler named Blenkarn odered some goods from the plaintiffs in a letter in which

he signed his name to resemble that of Blenkiron & Co, a firm known to the plaintiff.

Although the address of Blenkarn was not the same as that of Blenkiron & Co, they were

both in the same street. The plaintiff, without noticing the discrepancy in the street number,

despatched the goods to Blenkarn, who promptly disposed of them to the defendants, who

bought in good faith and for value.

Held: There was no contract existed between the plaintiff and Blenkarn, and the case had to

decided as though Blenkarn had stolen the goods; at no stage had the plaintiff voluntarily

decided to entrust the possession of their goods to Blenkarn. [Source 4]

Shaw v Commissioner of Metropolitan Police (1987)

Plaintiffs agreed to buy a car from one L who had obtained it from the true owner,

together with a certificates signed by him saying that he had sold the car to L. In fact, this

was untrue; as the owner had not sold, the car to L- He had merely authorized L to sell it on

his behalf. L was a swindler who did not pay for the car, and when suspicions were aroused,

he disappeared, leaving to the title to the car in doubt.

Held: The Court of Appeal denied the plaintiff’s claim; though on the rather unsatisfactory

ground that s.21 did not apply where the buyer had merely agreed to buy the goods but only

where he had bought them. Plaintiff’s claim failed because they had not acted to their

prejudice since they had not paid the price. [Source 3]

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Lewis v Averay (1972)

Lewis was a postgraduate student and wanted to sell his car - a Mini Cooper S. He

placed a newspaper advertisement offering it for sale at £450. A person telephoned and

arranged to see it, and took it for a test drive. He said he was Richard Greene - a well-known

actor (used to play Robin Hood - very appropriately). He wanted to give a cheque for the

£450. Lewis quite sensibly asked for identification. He had shown a Pinewood Studio's pass,

and was then happy to take the cheque in return for the car. It turned out that the cheque and

other documents had stolen. The car was subsequent sold on to Averay who purchased it for

£200. Lewis now sues Averay for conversion. Was there a contract of sale under which the

property passed from Lewis? If there was no contract - for example because any purported

contract was void ab initio, then Averay could not claim good title as the rogue would have

had none to pass on. Clearly, Lewis was mistaken about the rogue's identity. There are two

cases, which cannot be reconciled. [Source 1]

Pearson v Rose & Young (1951)

The plaintiff delivered his car to X, a mercantile agent, in order to obtain offers, but

with no authority to sell it. The agent obtained possession of the registration book by a trick

in such circumstances that the owner had clearly not consented to parting with the possession

of it and the promptly sold the car, as he had intended to do from the first.

Held: The Court of Appeal held that the question whether the agent had committed larceny

by a trick was quite immaterial and that in each case the only question was whether the goods

were in his possession with the consent of the owner, but not of the registration book.

Newton of Wembley LTD v Qilliams (1965)

The plaintiffs sold a car to A, who paid by cheque. Although he was given possession,

it was agreed that the property would not pass until the cheque was honoured. The cheque

was dishonoured but A had resold the car to B who bought it without knowledge of the

position. B resold it to the defendant. The plaintiffs tried to recover the car from him.

Held: A, original buyer, was in possession with the consent of the owner. Hence, he could

pass a good title to B, who in turn transferred it to the defendant. The defendant was,

therefore, entitled to keep the car. [Source 2 ]

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Group Activities Log Report

Members: 1) Syed Muhammad Asim (TP 018321)

2) Chong Moon Yee (TP 018573)

3) Ziyad Khalid (TP 015382)

4) Esther Henry Shilla (TP 018026)

FIRST MEETING

Date : 29 April 2009 (Wednesday)

Time : 12.40pm

Location: Syndicate Room, TPM Main Building Level 2

Proceedings:

12.40pm – 1.00pm Read and discuss on the question generally.

1.00pm – 1.45pm Divided task and responsibility to group members.

SECOND MEETING

Date : 15May 2009 (Friday)

Time : 12.30pm

Location: Discussion Room, Enterprise 3

Proceedings:

12.30pm – 1.20pm Discuss the materials that have been research from members.

1.20pm-2.00pm Elaborate and determine the best point.

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THIRD MEETING

Date : 22 May 2009 (Friday)

Time: 12.30pm

Location: Discussion Room, Enterprise 3

Proceedings:

12.30pm – 1.15pm Discuss about similar cases

1.15pm – 1.45pm Correction on the works without missing any information

FOURTH MEETING

Date : 29 May 2009 (Friday)

Time: 12.45pm

Location: Syndicate Room, TPM Main Building Level 2

Proceedings:

12.45pm – 1.20pm Combine and arrange work done by members

1.20pm – 1.40pm Double checking the grammar and report before ready to submit.

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Workload MatrixGroup Members:

Area of Responsibility Name and Signature of Member

1) Elaborate point for body and typing2) Research for similar cases3) Monitor the progression of the report

Chong Moon Yee(TP 018573)

1) Write draft for body2) Documentation of introduction3) Documentation for Conclusion

Syed Muhammad Asim(TP 018321)

1) Research of related issue 2) Write workload matrix3) Online research

Ziyad Khalid( TP 015382)

1) Write group activities log report2) Formatting of the report3) Research books

Esther Henry Shilla(TP 018026)

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Juju v Timber Supply Ltd- Group Assignment.doc 1

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Transcript of Juju v Timber Supply Ltd- Group Assignment.doc 1