BUS201: Sam Lee is an Ambitious Hawker Turned Entrepreneur who is Looking to Expand his Food Court : Contract & Agency Law Report, SUSS, Singapore

Question 1
Sam Lee is an ambitious hawker turned entrepreneur who is looking to expand his food court business. He has been buying up small coffee shops around Singapore, especially from elderly owners who are getting ready to retire and wish to sell their business for a profit.

Sam met with Uncle Peng, his father’s brother, who was the owner of a small coffee shop called
“PENG PENG” in the northern part of Singapore. Uncle Peng was getting on in years and lamented that his children did not want to take over the business. He told Sam that he wanted to sell his coffee shop business so he could retire and travel around the world. He further said that his coffee shop was recently valued at $3 million.

Sam was excited at the idea and made an offer of $3 million on the spot to Uncle Peng. Uncle Peng was surprised and asked Sam if there were any terms that they needed to finalize.

Sam replied by saying, “We are family and we should trust each other. We don’t need to spend money on lawyers to complicate matters with so many terms.” However, Sam tried to address Uncle Peng’s concerns by scribbling on a piece of paper the following statement:

“Uncle Peng will sell his coffee shop (PENG PENG), located at 2 Lorong Chuan, to Sam for $3 million, subject to final terms (if any) being agreed within 1 week.”

Sam proceeded to sign on the piece of paper, before offering it to Uncle Peng to sign. Uncle Peng also signed on the piece of paper. Sam and Uncle Peng also shook hands.

The next day, Uncle Peng announced to all his employees, customers and suppliers that he had sold PENG to Sam and they should immediately start dealing with Sam. Sam also started to liquidate some of his stock investments in order to raise funds to finance the purchase of the coffee shop. However, when Uncle Peng turned up at Sam’s office two days later to execute the formal paperwork, Sam told Uncle Peng that he no longer wanted to buy the business.

(a) Explain whether there is a valid contract between Sam and Uncle Peng. In your answer, you should identify and discuss the four (4) elements of a contract.

(b) Assuming that Sam and Uncle Peng disagree on whether there is a valid contract between them, identify and discuss one (1) alternative dispute resolution (“ADR”) the method which you would recommend to the parties to resolve their dispute. In your answer, you should compare and contrast your recommended ADR method with
litigation, and provide reasons for your recommendation. (Note to students: You are expected to conduct some research on your recommended ADR method to support your answer. However, you are not required to cite the Rules of Court.)

Learning Outcomes
Knowledge & Understanding (Theory Component) By the end of this course, you should be able to:
1. Discuss the nature of law, the function of business law, and highlight the salient features of the Singapore legal system, especially those that impact the business activity.
2. Describe how a contract is created, performed, and discharged, and provide examples of common contracts in the business environment.
3. Identify the key elements of a contract, namely offer acceptance, consideration, and legal intention, and examine the legal rules applicable to them.
4. Distinguish express terms from implied terms, conditions from warranties, and identify innominate terms in a contract.
5. Interpret exemption clauses in a contract and test their validity by applying the legal rules in relation to them.
6. Recognise the circumstances, also known as vitiating factors, which can undermine the formation and performance of a contract and their legal impact on the contract.
7. Examine the different ways in which a contract may be discharged, and the types of remedies available for a breach of contract.
8. Use the concept of limitation of actions and demonstrate an understanding of its impact on suing for remedies under contract.
9. Give examples of agency relationships in the business context and explain how agency law principles can be used to reduce the risks associated with agency arrangements.
10. Outline the duties and liabilities of principals and their agents.

Key Skills (Practical Component)
By the end of this course, you should be able to:
1. Analyse and evaluate decisions of reported cases critically to demonstrate an understanding of the legal principles learned.
2. Apply Singapore case law and legislation to new situations to solve the problem or determine the most appropriate outcome.
3. Demonstrate the essential knowledge and interpersonal skills to work effectively in a team.
4. Show well-developed written proficiency.
5. Develop oral presentations in areas related to Contract & Agency Law.