Legal Relationship Between Sonny and Dong - Breach of Duty and Expensive Fabric Contract

Background Information

Question 1

Sonny Chu is a university student majoring in entrepreneurship and international business. Two years ago, while on a student exchange program in China, Sonny came up with an idea for an Internet business. In China, Sonny had been able to purchase tailor-made silk suits for $250 to $400. The equivalent suits cost $1500 to $1800 in Canada. Sonny believed that he could offer the tailor-made silk suits to Canadians at close to the same price that he had paid for the suits if he could solve the difficulty of having customers take their own suit measurement.

Back in Canada, Sonny worked with a design student, and together they were able to develop a simplified method of taking suit measurements. With this problem solved, Sonny set up a website for his business called “This Suits Me.” The website featured several suit styles, a range of silk fabric swatches, and instructions for taking measurements. Customers could easily order suits by clicking on the style and fabric and sending in their measurements by following the simplified instructions provided.

To handle the Chinese end of the business, Sonny employed Dong Lee, a student he had met on exchange trip. Dong was born in China and is very familiar with the fabric industry, as both his mother and father are dressmakers. His job for Sonny involves purchasing silk fabric, engaging the services of Chinese tailors. The arrangement proved to be very profitable, and, within six months of establishing the website, Sonny was meeting all his sales targets. However, a couple of recent developments threaten the success of Sonny’s business.

Dong agreed to pay $100000 to a Chinese supplier for several bolts of silk fabric. Although the fabric is beautiful and will make wonderful suits, Sonny believes that Dong has agreed to pay too much for the fabric and, further, he does not think that his business can afford the purchase at this time. Sonny wants to cancel or renegotiate the contract. He is also very angry with Dong because Sonny had expressly told Dong he could not enter into any contracts on his behalf in excess of $25000 without getting his permission first.

Sonny has also discovered that Dong has been purchasing fabric and engaging tailors on behalf of some of Sonny’s competitors. When confronted with this information, Dong stated that he did not see any problem with his actions as he had not signed any exclusive representation contract with Sonny.

Legal Relationship Between Sonny and Dong

a) Applying the relevant principle of law, identify and discuss the nature of the legal relationship between Sonny and Dong. Discuss whether there has been of any breach of duty.

b) Applying the relevant principles of law, discuss whether Sonny is bound by the expensive fabric contract Dong entered into with the Chinese supplier.

Question 2

Jasper Dicks, the newly appointed director of human resources for Dumpster’s Storage & Delivery Ltd has been busy with implementing and updating written employment contracts for all Dempter’s employees and overseeing the installation of video surveillance system in the warehouse.

The latter project has not been without problems. Shortly after the video system was up and running, an anonymous source informed Jasper that an employee was posting uncomplimentary comments about Jasper and Dempter’s on his Facebook page. An investigation revealed that 43-year-old Clint Braums, a traffic control technician who had been with the company for 10 years, had posted that “Jasper Dicks is a fascist!”, “Working at Dempster’s is like working in a prison camp for the criminally insane”, and “Don’t apply for a job at Dempster’s unless you like having your every move recorded.”

When confronted, Clint initially denied posting the comments and blamed his kids but eventually admitted he had done the posting. He became very upset and angry, and screamed at Jasper, “This is a free country and I can say whatever I want on my own time. I will not be monitored all the time by you rabid fascists.”

Not wanting the situation to escalate any further, Jasper immediately fired Clint and called security to escort him out of the building.

“You have not heard the last of me!” Clint shouted on his way out.

The gap left by Clint’s untimely departure necessitated transferring 58-year old Josie Pickard from her administrative position supervising employees to Clint’s operational position. The new position for Josie, who had been with the company for 20 years, was in the same location, required the same qualifications, and was remunerated at the same pay grade.

Believing he had solved the employee problem, Jasper was surprised when Josie did not show up for work. He was even more surprised when he received phone calls from lawyers for both Clint and Josie indicating that they were considering legal action.

(a) Applying the relevant principle of employment law, explain the legal grounds/principles Jasper can validate. Discuss whether the dismissal is justified.

(b) Applying the relevant principle of employment law, explain whether Josie’s dismissal can be validated under any legal principle. Discuss the grounds Josie can challenge her dismissal.

(c) Applying the relevant principle of employment law, discuss the remedies that are potentially available to Clint and Josie, assuming their dismissal were not justified

Question 3

Joe entered into partnership with two others in the establishment of a real estate sales agency. The other two, Sam and Harry, had considerable experience in the real estate business but no money. Joe, on the other hand, had his own home and several significant assets, and although he didn't have any experience in the real estate business, his monetary contribution made him an equal partner with Sam and Harry. Unfortunately, Harry misused some trust funds that had come into his care as a result of business, investing it in the business of one of his sons rather than an interest-bearing account. The business of the son went sour and the money was lost. The client sued Harry, Sam, and Joe.

a) Applying the relevant legal principles , identify and explain in details the type of partnership involved. Discuss the liabilities of Harry, Sam, and Joe based on the relevant legal principles

Amanda and Florence decided to form a partnership for selling gourmet picnic baskets. To raise sufficient capital, they convinced their mothers to invest $5000 each as limited partners. Amanda's mother was an experienced restaurateur and watched the business with great interest. On several occasions, she advised them on the business and contacted old business associates to buy surplus stock. She even filled in taking orders in the office when needed. A customer who was made ill by contaminated food from a tin can supplied in one basket sued.

b) Applying the relevant legal principles, identify and explain in details the nature of the partnership as well as the liability, if any, of the mother(s)?