CHOOSE either Problem A OR Problem B
Problem A
Elizabeth has recently moved to Hong Kong from Australia. Her spoken Chinese is exceptional, but she does not read or write Chinese terribly well, and she has little experience in the way business is conducted in Hong Kong.
Elizabeth ran a successful food merchant business in Australia and is now in the process of establishing a similar business here in Hong Kong. She approaches Felix to negotiate the supply by Felix’s business, The Crispy Chicken, of food for her business.
During the negotiations, Felix realises how little Elizabeth understands Hong Kong business practices, and convinces her to agree to pay much more for his food than he charges similar customers. He tells her that it is unusual for Hong Kong businesses negotiating such an arrangement to use legal representation. He also tells her that it is normal practice for a customer in her position to distribute materials advertising his restaurant to all her own customers, and to commit to a contract with him for at least ten years.
Elizabeth explains that these arrangements would be extremely unusual in Australia, but Felix insists that that is the way things are usually done in Hong Kong and that she has no choice but to agree to them, since any other supplier would insist upon the same thing. When Felix instructs his solicitors to draw up the contract, he tells them to make it especially complicated and legalistic.
Elizabeth signs the contract agreeing to all of Felix’s requirements, and she does so without seeking independent legal advice or reading it herself. A few weeks later after talking to some helpful Hong Kong friends, she realises that she may have done the wrong thing and is now wondering whether she can cancel the deal she has made with Felix.
REQUIRED
1. Using the PIRAC method advise Elizabeth as to her legal rights under Australian law. Do not refer to any Australian legislation in your answer.
2. Would the position be any different under Hong Law? in your answer please consider the application of the Unconscionable Contracts Ordinance (Cap 458) Hong Kong.
Problem B
Matthew, Roger, Brian and Fred are all ex-soldiers and have decided to start a private security business. Due to ownership issues and the benefits associated with having limited liability, their lawyer recommends that they should register a company for the business. They agree and instruct their lawyer to register a company to be called Acme Security Pty Ltd. It is agreed that Matthew, Roger, Brian and Fred will each be allotted 100 ordinary shares in the company.
After the company is registered, they decide to employ Albert as Office Manager and Company Secretary. He is provided with a uniform which states his job title as “Office Manager”.
Belinda works in used car sales and is a good friend of Albert who tells Wanda about his new position at Acme Security Pty Ltd. Belinda tells Roger that she has been trying to sell a truck and it would be perfect for the security business. Belinda shows Albert the truck and lets him drive it. Albert agrees that the truck would be a great addition to the security business and thinks the price Belinda is asking is very reasonable. Albert agrees to buy the truck for the company and signs a sales order, as “Company Secretary” for and on behalf of Acme Security Pty Ltd.
The company refuses to pay Belinda for the truck and denies any liability under the contract.
REQUIRED
Using the PIRAC Method advise whether Belinda can rely on the assumptions in s 129 of the Corporations Act 2001 (Cth) in enforcing the contract against Acme Security Pty Ltd. Do not refer to Hong Kong Law.
