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Law Questions On Breach Of Contract Assessment Answer

Question 1 (10%) 

Nancy visited a pub in Tsimshatsui last week. She got acquainted with a new friend called Tim. Tim bought a bottle of wine from the pub and gave it to Nancy as a gift. Nancy took the bottle of wine home and drank it the next day. It was found that the bottle of wine contained a decayed worm. Nancy felt very sick and was admitted into the Emergency Unit of a nearby hospital. The doctor certified that Nancy had suffered from food intoxication. 

  1. (a)  Explain whether Nancy can sue the pub for breach of contract. 
  2. (b)  Advise Nancy the proper cause of action to sue the pub and/or the manufacturer of the red wine and the necessary elements to prove her case. 

Question 2 (10%) 

Daniel was the Managing Director of Geotechnical Aerospace Co. (GAC), specialised in the marketing of aerospace vehicles and propulsion systems. This included planes, jets, helicopters, gliders, missiles and spacecraft. GAC also involved in researching, developing and testing new materials, engines, body shapes and structures that might increase the speed and strength of aircraft. Daniel was intimately familiar with GAC mode of operation and with its customers and suppliers. In particular, he knew the pricing structure of GAC and identity of each customer. Before leaving GAC, Daniel set up a side-line diverting business away from GAC to his own business' interests. He then resigned as managing director from the company and worked on his own. 

  1. (a)  Advise i) GAC an injunction against Daniel & ii) Daniel applied to the court have the injunction removed.
    What likely would be the court views concerning the breach of duty? 
  2. (b)  In relation to the principles and according to the Case discuss the following extent 

i) A Duty of Fidelity
ii) Confidentiality, Trade Secrets, Trade Connection iii) Restrictive Covenants & Restraint of Trade 



Question 1

  1. In the given scenario, Nancy visited a pub called Tsimshatsui with her friend Tim, where they bought a bottle of wine. On the next day, while drinking the wine, Nancy found a decayed worm in the wine which cause her food intoxication. The question of law occurred here is whether Nancy has the right to make a legal suit against the pub or not. In that case, a contract has been occurred between the pub and Nancy and any mistake or default in this transaction shall be considered as the breach of contract (Kwan, 2017). Hence, Nancy can sue against the pub for the breach of contract because they owe the liability towards her as they have provided services to her. 
  2. As per the law of contract, when an arrangement of sale or purchase held between the customer and service provider, the service provider automatically bound into a contract in which he owes the liability towards the customer for any loss caused in the course of transaction held with him. In this case, an offer was made by the pub for the sale of wine and Tim has accepted this offer by purchasing the bottle of wine in the exchange of consideration thus a contract has been created between Nancy and Tsimshatsui pub as it comprises all the essential elements of a contract. Hence, to prove the existence of contract between them, Nancy can argue on the basis of a relevant case of “Carlil v Carbolic Smoke Ball Company 1893” where an unilateral offer has been made by the company through an advertisement which was accepted by Mrs Carlil by buying the smoke balls offered by the company (Bertino, 2018). Later, on the denial of company for compensating the claims, the Court held that Plaintiff has the right to make a claim against the company as a contract was occurred between them and liability of payment has also been arisen on the defendant. 

Question 2 

  1. In the given scenario, Daniel has performed the breach of duty of fidelity towards his employer i.e. GAC. Therefore, GAC has the right to make a suit against Daniel for performing dishonest conduct against the company and also request the Court for an injunction on his business activities. According to this duty, an employee is prohibited to work in the competition of employer, to make secret profits, to disclose secret business information or trade secrets to anyone and to behave dishonestly. While in the given case, Daniel has used the information of GAC for creating a base for his own business and after resigning from his employment from GAC he established his own business in the competition of GAC (Grierson, 2018). Also, Daniel was found guilty for the breach of confidentiality and trade secret as he used the connections and sources of GAC for establishing his own business. Hence, GAC may impose legal injunction on the activities of business carried by Daniel. 
  2. According to the given scenario, certain terms can be discussed as follows: 
  3. Duty of Fidelity: This is duty imposed on every employee towards their employers which is also known as duty of good faith or loyalty. It covers several fiduciary duties of employees such as to stay honest, to keep the trade secrets and business data secure and to not create competition.
  4. Restriction covenant: An employee is restricted to perform certain activities which are determined and inserted in his employment contract by the employer for a specific period of time (Gatewood, & Malish, 2019). These clause are known as restriction covenant. If an employee performs in the breach of such clauses then the employer may take remedial actions against him. For which the employer may use the sources of legal injunction or legal suit. 
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