Monday 29 April 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: Alice and Bob are both directors of a company that manufactures electronic gadgets. Alice proposes a new marketing strategy aimed at targeting a younger demographic, while Bob advocates for maintaining the company’s current marketing approach. During a heated board meeting, the disagreement between Alice and Bob escalates, with each director vehemently defending their position in front of the other directors. Ultimately, the board votes in favour of Alice’s proposal, and the new marketing strategy is implemented. However, Bob is dissatisfied with the decision and believes that Alice manipulated the other directors to secure the outcome in her favour as she has hired a marketing company to implement the new plan, in which she is a major shareholder. Bob thinks that the company should be taking legal action against Alice for breaching her duties as a director. Which of the following principles relevant to the duties of directors would be most suitable as a ground of challenge in this scenario?
- The duty to stay within conferred powers
- The duty to exercise reasonable care and skill
- The duty to act in good faith
- The duty to avoid conflicts of interest
- The duty to promote the success of the company
Live Event: Great News! I will be hosting a free LIVE SQE1 prep session on 6 May 2024 at 12.30 London time. Everyone is invited, looking forward to seeing you on our live event. Use link https://www.youtube.com/live/v7jHLxhsuAQ
Special Offer: We are celebrating reaching 200 subscribers by offering a special discount to Practice Works AI-led learning support for SQE1. Visit https://www.practiceworks.io/sqe-prep and use IOANNIS20 for 20% off any paid plan (available only for the first 30 people who use it!). Terms & Conditions apply.
Answer and feedback to last week’s question: Alice books a taxi to take her to the airport to catch a flight scheduled to depart at 10:00 AM. The taxi service, operated by Bob, assures Alice that the taxi will arrive at her location by 8:00 AM to allow ample time for the journey. However, due to a delay in traffic and a breakdown of one of Bob’s taxis, the taxi arrives at Alice’s location at 9:30 AM, causing her to miss her flight. As a result, Alice incurs additional costs for rebooking her flight, accommodation, and rescheduling her appointments at her destination. Alice decides to take legal action against Bob for breach of contract. Which principle governs the assessment of damages for breach of contract in this scenario?
- The principle of caveat emptor
- The principle of equitable estoppel
- The principle of punitive damages
- The principle of remoteness of damages
- The principle of equitable rescission
Correct Answer: 4. The principle of remoteness of damages. Feedback: The assessment of damages for breach of contract is governed by the principle of remoteness of damages. According to this principle, a party who breaches a contract is generally liable for damages that arise naturally from the breach or those that may reasonably be supposed to have been in the contemplation of both parties at the time the contract was made as the probable result of the breach. In this scenario, the court will consider whether the loss of missing the flight and incurring associated costs was within the contemplation of both parties at the time of booking the taxi. If it is determined that such loss was foreseeable, Bob may be held liable for damages to compensate Alice for the additional costs she incurred as a result of missing her flight. The principle of mitigation of damages also applies, requiring Alice to take reasonable steps to mitigate her losses by seeking alternative transportation options or minimizing her expenses.
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All the best
Dr Ioannis Glinavos
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