Case Study 1-
Adam wants to sell his flower shop business to Eve. Adam states that the flower shop turns over $600,000, and showed Eve a few monthly receipts to show that the company is turning over up to $50,000 per month on average. What Adam did not tell Eve was that during three months of the year during winter the flower shop only makes approximately $30,000 per month due to less variety on offer to customers. This impacts on the total annual turnover of the flower shop so it actually makes approximately over $540,000 annually in turnover only.
Eve bought the business from Adam on the evidence of Adam's claims, and also on the belief that she can do a better job than Adam and increase the shop's sales two fold.
Months after purchasing the business from Adam, Eve realised that the business only turns over so much, and is barely enough to keep the business running and pay its overheads. The business was therefore unprofitable.
a. Advise Eve of her rights, if any, against Adam and any remedies available for her under common law
b. Would your advice be different if Eve has asked Adam the exact turnover of the business?
Case Study 2-
Bowral Heritage Farms and Brian's Flower Shop have been doing business together for over 10 years. Brian, the owner of the flower shop, orders flowers from Robert, the owner of Bowral Heritage Farms for his shop in the city.
Both Brian and Robert are septuagenarians and, despite their age, still continue to work and be actively involved in their respective businesses. Unfortunately, they have not moved on with technology and still continue to do business by post. On Mondays, Brian would post his order of flowers to Robert, who would usually receive the order the following day, and would send his confirmation the same day which Brian would receive on the Wednesday. Ordered flowers are then delivered Thursday. This has been their way of doing things since they started doing business together.
One Wednesday Brian, after not having received Robert's confirmation of the order he posted last Monday, decided that Robert would probably not be able to fulfil the order because of the volume (Brian received a huge order for a wedding that weekend). Brian decided to order from another supplier Wednesday afternoon for delivery the following day and, because of the short notice, paid a premium for his order.
On Thursday Robert's flower delivery and the other supplier's arrived to the annoyance of Brian. Brian refused to pay Robert for his order as he thought Robert was not going to fulfil the order after not receiving his confirmation on Wednesday. What Brian and Robert were not aware was, there was a postal strike on Wednesday which delayed Robert's confirmation mail of Brian's order to Thursday afternoon instead.
a. Advise Robert of his options using case law
b. Would your advice be the same if Robert's mail, instead of confirming the Brian's order, advised Brian that he is only able to fulfil half of Brian's order and delivered only half of what Brian ordered? Support your answer using case law.