Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ruby agreed to purchase a building near Flinch town for her to venture into the baking and pastry business. The purchase price of the building

Ruby agreed to purchase a building near Flinch town for her to venture into the baking and pastry business. The purchase price of the building was $3.5 million, payable by a deposit of $350,000, due in December 2018. The sale and purchase agreement also stated that Ruby has to pay $30,000 per month, due before the 7th of each month. Ruby also agreed to pay interest. There was a clause in the contract (Clause 7) that provided that, in the event of Danny failing to pay the instalment three times consecutively, the deposit or the balance of the purchase price at the respective times herein set out, all 'money actually paid by Danny' were to be 'absolutely forfeited' to David. Clause 7 also allowed DAVID to end the contract without prior notice or to take or retain possession of the property. Clause 8 of the contract made time of the essence 'in all respects.' Clause 10 stated that title to the property was to be transferred on payment in full of the purchase price. Ruby paid the deposit and took possession of the building. Ruby wanted to renovate the building into a few shop lots. She then, signed a contract with TIM PTE LTD (ONG) for the renovation. The renovation was to be completed by the end of March 2019, costing $50,000. Ruby paid $20,000 at the commencement of the work. The balance of the amount was to be made at the completion of the work. In February 2019, Tim abandoned the work. Ruby was very frustrated with Tim because she had to find a new contractor to continue the work. After one year, she had a financial problem, and the business deteriorated. In January, February, and March 2019, she paid the instalments a few days late; in April, she only can pay half of the instalments. On 1 May, David informed Ruby of his right to end the contract for the breach but said that he would not exercise that right if she paid the remaining instalment before 15 May. He confirmed this in writing and wrote to Danny a, stating: "I will not take action under the contract until 15 May, but this must be regarded as an act of grace and without prejudice to and in no way varying my right to the strict enforcement of our contract." However, Ruby failed to pay the remaining instalment. David wrote to her advising him that she had forfeited to him the money she had paid him, and that the agreement was at the end. David has started action for a declaration that the contract has been validly terminated and is seeking to repossess the building. She also intended to rent the shop lots to generate income to pay for the instalments. She offered to rent one shop to Danny for $3,000 per month. During their discussion, Danny made the following statements to danny: 'If you open your shop here, I'd say the business pulls in at least RM2,000 a week. No one so far is selling homemade products in this area. You can display your product outside as well." Danny decided to rent the business premises and operate the new branch of his shop. After running the shop for 3 months, the most the restaurant earned in a week was RM1,000. He also discovered that some other shops were selling the similar product at cheaper price in the area. He was very upset because he had suffered a loss. Danny was so worried about his loss in his business, and he wanted to hire Peter to provide him with a consultancy on how to increase the sale in his restaurant business. When Danny asked Peter about the fees, Peter said: " My fee is $10, 000 but I know you cannot afford that in this current state. I will think about it and get back to you later. Perhaps we should wait and see what happens." Danny wanted to give Peter something now. Peter thought about it and informed Danny that if he could pay college fees of $4,000 for his son, Bob, he would not claim the balance from him anymore. He agreed that he would pay Bob's fees.The next day, Danny contacted Bob explaining what had been agreed. Bob was delighted and gave him all the relevant details. Later the same day, Peter called Danny to see if he had paid Bob's college fees. He informed Peter that he would pay for them at the end of the month. Ruby and Danny seek your advice regarding the above matter. 


Find two issue from the above matter  and explain the law and application for each issue.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Issue 1 Forfeiture of Money Paid under Clause 7 Law and Application According to Clause 7 of the con... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay

6th edition

013703038X, 978-0137030385

More Books

Students also viewed these Law questions

Question

Discuss three applications of Skinners research.

Answered: 1 week ago

Question

s i n + c o s ( / 2 ) = 0 on the interval [0, 2)

Answered: 1 week ago