TABLE OF CONTENTS

● CASE STUDY NUMBER 1 2 ● ANSWER 1

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CASE STUDY NUMBER 1
Shasha is a lecturer in Biology at Delhite University, and a keen gardener with a large orchard.
Grow Sdn Bhd is a manufacturer of gardening requisites, and has a number of retail outlets
from which they sell their own products and those of other manufacturers. Last March, Shasha
visited one of these outlets to buy fertilizer. In the past, she had always used a top brand, but
was hoping to find something cheaper. She looked at several types of fertilizer on display,
noted the widely differing prices, and read the promotional leaflets. She studied the chemical
composition of each fertilizer, given in the leaflets. Some fertilizers required application to the
roots, others to leaves. She then sought the advice of the only available sales assistant, a youth
who did not seem to know much about the products on sale. The sales assistant
recommended that Shasha should buy Grow Sdn Bhd’s ‘Apple Gro’ which, at $60, was
considerably cheaper than all other brands in stock. Shasha decided to buy a sack of ‘Apple
Gro’, and was given a sales invoice to sign, which stated:
1. Grow Sdn Bhd agreed to refund the purchase price paid for any goods which fail to
conform with commercially recognized standards of quality or with any description applied
to them.
2. Any damages or compensation payable shall not exceed the purchase price of the goods
sold.
3. All claims against Grow Sdn Bhd must be made within 21 days of purchase.
4. Grow Sdn Bhd does not give any undertaking as to the suitability or fitness of goods
purchased for any particular purpose.
Shasha paid for the fertilizer and signed the invoice without reading it.
The instructions on the fertilizer stated: “Spray once on leaves and fruit during June or July in
dry weather”, and gave details of dosage rates. Shasha duly sprayed her apple trees on a sunny
day in July, but that night there was a heavy rainstorm, which washed away some of the
fertilizer before it took effect. Shasha did not realize that rain could wash away the fertilizer
and no specific statement to this effect was contained in the instructions. The fertilizers Shasha
had previously used were applied to the tree roots and were not affected by rain. When the
trees produced fruit, the apples were small and sour. Though Shasha had previously sold most
of her apple crop to a local greengrocer and had won prizes for her

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apples at local horticultural shows, this crop could not be sold or entered for shows. As a result, Shasha
became depressed, her lecturing work suffered, and she was not even
shortlisted for a promotion which most of her colleagues thought she would get. Shasha
now wishes to sue Grow Sdn Bhd for all compensation possible, including the purchase
price of the fertilizer, loss of profit on sale of the apple crop, loss of prize money from
shows, stress, and loss of the increase in salary she would have got on promotion. Grow
Sdn Bhd deny liability, and argue that, in any event, they are protected by the invoice
terms from any liability beyond the purchase price paid by Shasha.

Question:
Based on the above, you are required to advise Shasha and your answers should cover the
following based on contract law and Sale of Goods:
On what grounds can Shasha make a claim against Grow Sdn Bhd and assuming that Grow
Sdn Bhd is liable for breach of the contract of sale, and is not protected from liability by the
terms of sale in the invoice, discuss the remedies available to Shasha.
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ANSWER 1
According to the Sales of Goods Act (Chapter 170 of the Laws of Brunei), a contract sale is defined as a
contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a
money consideration, called the price. Applying this to the case study, it can be concluded that there was
a sales contract between Shasha and Grow Sdn Bhd where Shasha paid for the fertilizer to get the
ownership. Thus, depending on the case, it became clear that there had been a breach of the contract of
sale which allowed the innocent party to claim damages and to refuse the contract depending on the
classification of the term that has been breached. In this case, Shasha is the plaintiff where she filed a
lawsuit against the company. And Grow Sdn Bhd is the accused charged with the crime. Terms of contract
(Section 12-15) have implied terms as to title, description, satisfactory quality, and fitness for purpose
and sale by sample. In fact of the matter, Shasha can make a claim on the grounds that Apple Gro is not
of satisfactory quality and is not fit for purpose. Section 14 (2A) explains the satisfactory quality and the
factors which should be considered while regarding a good as satisfactory quality. These factors include
any description of things, the price, and other relevant circumstances. (Bits of law, 2013) Applying the
reality of Shasha's case, it is likely that the quality of Apple Gro will be lower than that of more expensive
fertilizers. But the consumer must also take into account the suitability for all the purposes for which the
product is normally supplied. To put this into practice, fertilizers are often provided to enhance plant
growth and products of plants. However, Apple Gro has not used this purpose for Shasha's apple tree.
Thus, it can be proved that Apple Gro is a product of unsatisfactory quality whilst its cheap price. Also,
the absence of a specific warning in the Apple Gro guide could further validate the problem.

Section 14 (3) implies a term that where a buyer expressly or impliedly makes known to the seller any
particular purpose, the goods are reasonably fit for that purpose unless it was unreasonable for the
buyer to rely on the skill or judgement of the seller. Regarding the incident, Shasha did not specify the
particular purpose of the fertilizer to the sales assistant and only mentioned that she wanted a cheaper
product. In fact, all fertilizers have a common goal, so even if she doesn't mention the goal, most likely
the sales assistant already knows the real intent. Furthermore, it is said that sellers don't seem to know
much about selling products. So, logically, it doesn't make sense for Shasha to rely on a sales assistant’s
skill and judgment. Also, because Shasha wanted a cheap product, the sales assistant suggested an
inexpensive fertilizer without stating the standard quality or any downsides of the recommendation. It is

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a common-law rule that the requirement for terms to be considered incorporated by reference is that
they must be found in a document intended to be contractually binding. In this case, the contractual
document which is the invoice signed by Shasha is automatically considered to be valid even if she did
not read the terms before signing. However, considering the invoice was brought to Shasha’s notice only
when she decided to purchase the product. Therefore, it can be argued that the invoice is not a
contractual document because Shasha might not expect that there is such kind of contract terms that
was implied. Thus, it can be concluded that the terms in the invoice are not valid.

Brunei Law Chapter 170 (Section 52 (2)) implies the measure of damages is the estimated loss directly
and naturally resulting in the ordinary course of events, from the seller’s breach of contract. As a result,
Shasha can claim and recover the price she paid to Apple Gro. As for other compensation, she can only
receive damages for not selling apples and not forfeiting cash prizes during performances, nor for her
stress. or for not being pre-selected for a workplace promotion.
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CASE STUDY NUMBER 2

Rara has a business which specializes in car dealerships. He purchases vintage cars,
refurbishes them, sells them and is also engaged in hiring out cars. Rara is working on an old
jeep which requires a special type of absorber to enable it to travel over rough surfaces. Rara
gives a call to We R Shocked. Rara talks to Ayna, the manager: “I need three absorbers to be
used for off road driving”. In response to this, Ayna checks the brochure published by the
manufacturer and refers it to Rara. Ayna responds by stating that the A200 absorber can be
used for off road driving. Rara agrees to purchase three of the A200’s for $100 each. When
Rara installs them onto his jeep and takes it for a test drive over rough road, the absorbers
give way and cause the jeep to crash down, causing $2500 worth of damage to the car’s
body. It turns out that the information given by the manager was the wrong page of the
brochure, in which the correct information was that the A200 was not suitable for off road
driving.

Rara operates his business from a premise which he has leased from Ben for $5000 per
month since January 2015. The term of the lease indicates that the rent is to be paid to Ben
every six months and that it will increase every calendar year by 10%. Rara pays $30,000 in
June 2015 and December 2015, but then informs Ben that he is having financial difficulties
and needs to buy equipment. Ben replies by saying that he is OK to let Rara off from paying
the increase this year. Rara alternatively uses the money to buy some tools for his business.
In June 2016, Rara pays Ben $30,000 but the latter informs him demanding an additional
$3000. When Rara refers to their earlier conversation, Ben says “Whatever I said, the lease
you signed specifies that the rent will go up by 10% each year”.

Eddie is an ardent collector of vintage cars. He comes to know that Rara has a rare
Mercedes XL350 for sale on his website, priced at $20,000. Eddie sends Rara an email saying
“I offer to buy the XL350 for $18,500”. Rara replies back saying that it is too low but he is
willing to let go at $19,000. Eddie responds by saying, “No, I can’t pay that” so Rara replies
by saying “OK, I accept your original offer at $18,500”. When Rara brings the car to Eddie’s
house, he refuses to accept it or to pay the money.

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When Rara goes on holiday, Fiona looks after his car lot. Fiona does not own a car. A friend
of Fiona is about to visit town and asks Rara, “Can I hire one of your cars?” Rara states that
the price per day is $50, but due to her good deeds, Fiona could hire it at no cost. Fiona is
very happy and agrees, but when she comes to pick the car, Rara claims that he has hired it
out to a customer. Fiona says that Rara has breached their agreement.

Question:
Advise Rara as to his legal position in relation to each of the above scenarios. You should
assume that all facts given would be provable if the matters came to court.
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ANSWER 2

As per Contract Law Act 1999 (Section 2 (1)), a third party has a right to enforce a term of the contract,
the parties to the contract may not, by agreement, rescind the contract, or vary it in such a way as to
extinguish or alter his entitlement under that right, without his consent if the third party has
communicated his assent to the term to the promisor. So, if the matter goes to court, the third party,
Rara, can claim that the liability for damages rests entirely with Manager Ayna. Therefore, Rara did not
have to pay, as the fault was from Manager Ayna, who was very careless, due to which Rara got seriously
injured and should instead demand compensation from Manager Ayna for giving false information about
' A200 absorber.

The second issue is that there is a verbal contract between Rara, the tenant, and Ben who is the landlord
of the premises, which says that Ben will let Rara off from paying the increase for that year. Ben then
declined to confirm any verbal contract and said that the specifications in the lease paper would hold.
This can be considered a breach of contract. However, according to Section 18 of Landlord and Tenant Act
1985, a tenant must pay a cost incurred by a landlord in connection with the supply of services, repairs,
maintenance, insurance, as defined by a lease or other type of tenancy agreement. Therefore, Rara is still
liable to pay the extra 10% if Ben goes to court and doesn't agree to any wave-off agreement. Rara can
produce any evidence to the verbal contract with Ben to prove the existence of the agreement and the
terms of the agreement. But since there's no evidence, it's more likely that the court's verdict will be in
Ben's favor.

A contract of sale is an agreement between a seller and buyer in which the seller agrees to deliver or sell
something to a buyer for a fixed price that the buyer has agreed to buy. By applying this to the scenario,
there is a contract of sale between Rara and Eddie in the form of verbal assurance. When Rara brought
the car to Eddie’s house, he did not accept or paid for the pre-booked product by him. According to the
Contract Law, the word of the mouth that he had given will not be considered as unconditional consent.
Rara should have sealed the contract with Eddie on the purchase confirmation. Since this was not done,
the court is more likely to reject Rara’s appeal if he rings the court.

As mentioned in the last scenario, there is a verbal agreement between Rara and Fiona. However, a
breach of contract occurs because Rara broke his promise and hired the car for a customer. In the event,

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if Fiona appeals to the court, it is likely that the decision will be in favor of Rara because there is no
evidence of the verbal agreement. However, since this is a petty case and an insignificant matter, the
court may recommend the mitigation of the case by mutual contract.
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