Monday 11 March 2024
Dear Subscriber,
I hope you had a great weekend. Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
Question:
Emma enters into a contract with David to purchase a rare painting for £20,000. The contract specifies that Emma will pay David £10,000 upfront, with the remaining £10,000 to be paid upon delivery of the painting. After paying the initial £10,000, Emma learns that David does not actually own the painting and has no legal right to sell it. Emma immediately notifies David that she is rescinding the contract and demands a refund of the £10,000 she already paid. David refuses to refund the money, claiming that Emma breached the contract by failing to pay the full purchase price. What legal principles apply to this situation?
- The contract is void due to David’s lack of contractual capacity.
- Emma is entitled to rescind the contract due to David’s misrepresentation as to his ownership of the painting.
- Emma is not entitled to rescind the contract as she breached it by failing to pay the full purchase price.
- The contract is voidable at Emma’s option due to David’s fraudulent misrepresentation.
- Emma is entitled to specific performance of the contract, requiring David to deliver the painting as agreed.
Top Tip: Revising Contract Law? Have a look at the key topics discussed in this playlist.
Relevant Reading: For a relevant text to this week’s question see ReviseSQE Contract Law and Practice. You can obtain* the text by following this link.
Answer and feedback to last week’s question: DEF Ltd is a mid-sized private limited company with multiple directors and shareholders. One of the directors, Lisa, has been absent from board meetings and has not actively participated in the company’s affairs for several months. The other directors are concerned about the impact of Lisa’s absence on the company’s operations. Which of the following actions can be taken to address the situation?
- The other directors should wait for Lisa to resume her duties and take necessary actions in the meantime.
- The other directors can appoint a new director to replace Lisa without her consent.
- The shareholders can pass a resolution to remove Lisa as a director.
- The shareholders can discuss the matter with Lisa and encourage her to take a leave of absence.
- The other directors can hire a consultant to fulfil Lisa’s responsibilities until she returns.
The correct answer is No. 3: The shareholders can pass a resolution to remove Lisa as a director due to her prolonged absence. Directors of a private limited company have a fiduciary duty to act in the best interests of the company and actively participate in its affairs. Lisa’s prolonged absence from board meetings and lack of involvement in the company’s operations may raise concerns about her ability to fulfil her duties as a director. Under the Companies Act 2006, s.168, in England and Wales, directors can be removed from office through an ordinary resolution passed by the company’s shareholders. If the other directors believe that Lisa’s prolonged absence is affecting the company’s operations and is not in the best interests of the company, they can propose a resolution to remove her as a director.
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You will hear from me again soon.
All the best
Dr Ioannis Glinavos
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