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Law and Business Final Exam

Tan Tao University


Fall 2014
Professor Charles Maddox

This is an open book take home exam due by midnight on December 17th.
Your answers should not go beyond four pages using 12 point Times New Roman type, single spaced,
with 1 inch margins. Please use in footnoted citations for all of the material you are using.

Sanjay is an entrepreneur. He friend Tran is the CEO, Chairman of the Board, and majority shareholder
in a company that manufactures tires.
On January 15th, 2013, Sanjay and Tran got together for dinner. During that dinner Sanjay told Tran
about a new motorcycle manufacturing business he was trying to start. At that time he tells Tran that if
he invests in the new company the company will buy all of the tires it uses from Trans company. Tran
says that he is interested but needs to see the business plan.
Three days later Sanjay sends over the business plan. According to the plan, starting in January of 2015,
the new company is going to purchase 100,000 tires over the course of it first three years of operation.
Tran does some analysis and concludes that the profit from selling the new company 100,000 tires
would be $1 million US dollars. Based on that he decides that it would be worth investing in the new
company.
On October 1st, 2013, Sanjay forms the Viet Nam Motorcycle Company (VNMC) as a Joint Stock
Company. The company has an initial capitalization of $10,000,000 US dollars. There are 10 investors,
the largest of which is a wealthy banker named David Nguyen who has put $5,000,000 US dollars into
VNMC for 51% of the companys stock. Tran has invested $500,000 in VNMC for a 5% stake and Sanjay
has a 30% stake. Sanjay is also VNMCs CEO.
On November 5th, 2013, Tran meets Dhan, Dep, and Simon for lunch. Dhan and Dep are the CEOs of the
only other two tire manufacturers in Viet Nam. Simon runs the largest tire importer in Viet Nam.
Together the four of them control 98% of the tire market in Viet Nam.
During lunch they sign a written contract in which they agree to not sell any tires for below a certain
agreed upon price. In addition, they also agree to not make any attempt to steal existing customers
from each other. Appendix 1 to the contract contains a list of existing customersVNMC is included in
this list as a customer of Trans.
On December 1st, 2013, Simons largest foreign tire supplier informs him that they will be seeking a new
distributor if he cant increase their market share by 30% in the next three months.

On December 5th, 2013, Simon plays golf with David Nguyen. At that time he mentions that he will be
cutting the price of his imported tires and selling them for 25% less than any of his competitors. He can
do this by reducing his distribution fee.
On December 20th, 2013, David Nguyen tells Sanjay about the deal that Simon is offering. On December
25th, 2013, VNMC enters into a three year tire supply agreement with Simons company. On December
26th, 2013, Sanjay calls Tran and tells him that VNMC will not be buying tires from Trans company.
Tran is furious, he thinks he had a deal with Sanjay that in exchange for his investment he would get an
exclusive right to supply VNMC with tires. He also thinks that Simon is in breach of contract. You have
been hired to advise him.
1) Write a no more than 3 page internal Objective Memo describing his legal position.
2) In addition, write Tran a short, no more than 1 page, letter summarizing the findings of the
Objective Memo.