Monday 27 May 2024
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
I hope you are having a great bank holiday 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: Emily, a freelance graphic designer, entered into a contract with ABC Publishing Ltd. to create a series of illustrations for their upcoming book. The contract stipulated that the illustrations were to be completed and delivered by May 1st, with a payment of £5,000 upon delivery. Due to unforeseen personal issues, Emily was unable to complete the illustrations by the agreed date. ABC Publishing Ltd., needing the illustrations urgently, had to hire another designer at a cost of £7,000 to complete the work. ABC Publishing Ltd. is now seeking to recover the additional cost from Emily.
Which of the following statements best describes ABC Publishing Ltd.’s legal position regarding the breach of contract?
- ABC Publishing Ltd. can recover the full £7,000 from Emily as it represents their additional cost.
- ABC Publishing Ltd. can only recover £5,000 from Emily, which was the original contract price.
- ABC Publishing Ltd. can recover the additional £2,000 incurred, as it is the direct consequence of Emily’s breach.
- ABC Publishing Ltd. cannot recover any additional costs because Emily’s breach was due to unforeseen personal issues.
- ABC Publishing Ltd. can claim for £12,000, the combined total of the original contract price and the additional cost.
Live Event: SQE1 MCQs LIVE! Join me on 30th May 2024 at 12.00 noon London time and solve MCQs together. Everyone is invited, looking forward to seeing you on our live event. Use link https://www.youtube.com/live/1aTjMdI0TPM If you don’t make it live, you can access the recording via the same link.
Study Material: Revise problems in contract law by watching the dedicated lecture linked here. If you are looking for reading material on this topic, I recommend* the title you can find here.
Special Offer: Want an AI SQE tutor? Newsletter subscribers benefit from 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: Jane is a director of Tech Solutions Ltd, a company that offers IT equipment and related services to other businesses. Jane recently discovered that one of Tech Solutions’ key clients, Global Corp, is looking for new software solutions. Jane also runs her own separate software company, Innovate Inc. Without informing the board of Tech Solutions, Jane approaches Global Corp on behalf of Innovate Inc. and secures a lucrative contract for her own company. She is confident that Tech Solutions Ltd would not have an interest in offering this sort of software solution to clients, so she didn’t think there was anything worth discussing internally.
Which of the following statements best describes Jane’s position?
- Jane has not impacted Tech Solutions Ltd’s interests by securing a contract for Innovate Inc.
- Jane has no obligation to disclose her personal dealings with Global Corp to Tech Solutions Ltd.
- Jane has breached her duty to avoid conflicts of interest.
- Jane can only be held liable if Innovate Inc. fails to deliver on the contract with Global Corp.
- Jane is entitled to pursue business opportunities on behalf of others, so long as Tech Solutions Ltd is not interested.
Correct Answer: 3. Jane has breached her duty to avoid conflicts of interest. Feedback: Under section 175 of the Companies Act 2006, a director must avoid situations in which they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company. Jane has a fiduciary duty to act in the best interests of Tech Solutions Ltd and must avoid any conflict of interest. By securing a contract for her own company, Innovate Inc., without informing the board of Tech Solutions Ltd, Jane has placed herself in a position of conflict and failed to disclose a potential competing interest (the area of activity is not distinct). It is not up to Jane to make a determination on whether Tech Solutions would be interested, and a conflict can only be absolved via disclosure, something that has not happened in this case.
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All the best
Dr Ioannis Glinavos
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