CUHK: Issues in Contract

Week 4 Tutorial
Preliminary Reading: East v Maurer [1991] 1 WLR 461
You are a barrister asked by instructing solicitors to give advice on the
following:
Georges Lesser is a well-known French hairdresser, who operated two popular
hair salons in Tsim Sha Tsui. In 2015 he decided to sell one of the salons, in
Mody Road, and your instructing solicitors’ client, Mrs West, was keen to buy
the property and business. She entered into preliminary talks with Mr Lesser.
Shortly afterwards, however, she discovered that Mr Lesser was also operating
a very popular second salon, in Kimberley Road. Mrs West told Mr Lesser of
her concerns adding:
“I am new to this business and you are well established. I won’t be able to
make a success of Mody Road while you remain in competition as you are so
popular.”
Mr Lesser replied, in writing:
“You need have no concerns on this. I am planning to relocate to Phuket
(Thailand) and, although I will retain ownership of the Kimberley salon, I’ll visit
at most for a few weeks in the year.”
Having then done some financial analysis and concluded that she could make a
reasonable profit from the business, Mrs West decides to buy. She calls Mr
Lesser to tell him but repeats:
“If you are personally going to remain in the Kimberley salon, I’m not
interested.”
Mr Lesser again reassures Mrs West and they proceed to enter into a written
sale agreement for the purchase of the Mody Road property and salon at
HK$20 million (half paid from Mrs West’s life savings and the rest by a bank
loan). The written contract contains no mention of Mr Lesser’s future plans
and concludes with the words:
“This written agreement supersedes all previous negotiations between the
parties and represents the entire contract of sale between the parties.”
Having started in the salon in mid-2016, Mrs West strives hard to make a go of
the business but is unable to make enough money to finance the bank loan, let
alone show a profit. The principle reason is that, despite his previous
assurances, Mr Lesser has very much remained at Kimberley Road; merely
visiting Phuket for holidays for a few weeks per year.
Mrs West has sought advice from instructing solicitors who ask for your
Opinion on possible actions for breach of contract and/or misrepresentation.
Instructing solicitors wish to know the relative merits of any potential actions
and their likelihood of success.