Original post by Chanel_2020Im struggling on this past paper question for contract law and I need serious help..please could someone help with the following question below as it's causing me a lot of stress and worry:
Samantha v Denise
Denise was the owner of a small boutique, ‘PBM’, with offices in Canary Wharf and an enviable list of clients. Still, even though the agency was well known and had two excellent creative teams, Denise was a poor businesswoman and PBM was not doing well financially. She decided, therefore, to sell the agency and let it be known in advertising circles that he was looking for a buyer.
Denise started discussing the sale with twelve different possible buyers, one of whom was her goddaughter, Samantha. Early in the negotiations, she explained that in previous years the turnover had been around £6.7 million per year and the net profit was £800,000 per year. She also stated that she had decided to move to South Korea and would therefore hand over all her existing clients to whoever bought the business.
Eventually, after Denise had spent many months on exhausting negotiations, only Samantha and one other possible purchaser remained interested in pursuing the matter. Denise rang Samantha and told her that although she had decided on no account to sell the business for less than £5 million, she would make a special deal for her as she was her goddaughter and she could have it for £4 million if she made up her mind in two days – otherwise it would be £5 million. Samantha was both pleased and flustered at having to decide so quickly and, as it was a weekend, and she could, therefore, have no access to professional advice. She thought it was too good a chance to miss, however, and rang Denise on the Sunday night to accept her offer to buy at the agreed price. They later signed a formal contract which described the premises and the business, gave the price as £4 million, and included the following clause:
“Clause 69 Entire Agreement
The parties agree that these terms and conditions (together with any other terms and conditions expressly incorporated in the Contract) represent the entire agreement between the parties relating to the sale and purchase of JCS and that no statement or representations made by either party have been relied upon by the other in agreeing to enter into the Contract.”
Denise offered to show Samantha the accounts but Samantha, thinking it would be too embarrassing to give the impression that she did not trust her godmother, declined. The sale was completed and Samantha was very pleased to have her own business, at last. Very soon, however, it became clear that the annual turnover was going to be far less than £6 million and that he would be likely to make a net profit of around £300,000 per year, at the most. To make matters worse, after nine months, Denise opened another agency on the other side of Canary Wharf and her old clients gradually left Samantha for Denise.
In desperation, Samantha had to sell the business and could get no more than £600,000. She can demonstrate, however, that if she had bought for a similar sum another agency in the area, instead of PBM, she would have made a net profit of around £400,000 per annum.
1. What are the causes of actions that might be available to Samantha.
2. Advise Samantha of the likelihood of her success.