Legal Implications of the Two Contracts - Case Study Example

BUSINESS LAW ASSIGNMENT Name Class Instructor Institution City State Date Business Law Assignment Introduction In 2010, the son Igor Kharkaroff, Marcus Kharkaroff inherited the empire from his father. Marcus loves life, and he decided to buy many cars that are expensive. In fact, he goes ahead to buy cigars and champagne to fuel his lavish lifestyle. This trend has contributed to his downturn, and he found himself bankrupt after the world economic recession hit everyone. This situation led him to sell off his possessions including his two ships called Moskva and the Leningrad. He needed cash to sustain his expensive lifestyle. Due to the short of funds, Marcus decided to sign a sale agreement contract for the sale of the Moskva on October 1st. The sale agreement had a figure tag of 15 million US dollars. Incredibly, the sale of the Moskva ship was quick, having the funds credited to Marcus account on the same day. This issue received significant implications because unknowingly the funds were transferred without the knowledge that the Moskva ship suffered damage through fire, before sinking a week earlier. The ship could not be repaired nor fixed. This issue went on without the knowledge of the buyer or the seller. Notwithstanding, Marcus signed a sale agreement with a rich engineer called Imelda Chow. Chow was an Asian bought of the Leningrad ship. The price tag on the purchase contract recorded a fund of 20 million US dollars. In this sale, Imelda Chow saw the Leningrad as the red hulled vessel that was lodged at the Perth. She was convinced that this was a great deal, and she immediately initiated the 20 million US dollar deal. She credited funds to the bank account of Marcus on the same day. The deal was later going to become a fraud as the Leningrad was, in fact, a blue hulled vessel that was lodged beside the one that she had decided to buy. (Jadew, 2013, p.74). These agreements to purchase the ships went on without the knowledge of the buyer or the seller. An insurance and property agent came by a week later and accessed the Leningrad ship and it was found to be worth 10 million US dollars because the condition of the ship had deteriorated and lost a lot of values. In this paper, I am going to advise Marcus on the legal implications of the two contracts. It is evident that Marcus was into a lavish life that was full of expenses, and it was sooner or later that Marcus became bankrupt. In addition, he sold the Moskva and Leningrad ships without the knowledge that the ships were in a deplorable state. Given that fact that the Marcus was not aware of the sale agreement terms, he would end up losing a lot of money. On the other hand, he faces legal implications because he signed a legal agreement that was ultimately going to deemed as a fraud. Marcus is in grave problems and needs professional advice and alternatives so that he may redeem himself. In this legal essay, the key aspects of the legal implications and consequences will be highlighted. Background facts Moskva Ship The purchase of ships involves quite an enormous amount of money. In these dealing, there should be a lot of knowledge and professionalism when it comes to dealing with the sale agreement and its sale. In the Moskva Ship case, the ship-owner will land into legal implication due to the fact that he sold off his ship without knowing its current state. The ship seller is also running bankrupt due to his love for cigars, champagne, and expensive cars. The ship buyer will also land into problems as he did not bother to find out the state of the ship prior to buying the ship, and he had a little knowledge of the condition of the Moskva. This will lead both of them to legal problems since the sale agreement was signed and the funds of US dollar 15 million transacted. Legal Implications The buyer of the ship should have bought the ship with the supporting documents. Firstly, the seller should have a pursuant of the MOA that is based upon the NSF of 1993 which in Clause 11 of the legal advice NSF 1993. (Jadew, 2013, p.36). This policy stipulated that the ship should be bought at the exact time of inspection, and the ship should be thoroughly approved before the sale agreement or any monetary transaction is done. The buyer did not inspect the ship on the date mentioned above, and no legal documents were provided that support the sale of the agreement on October 1st. Marcus did not provide any evidence of the burning of the ship as well as its sinking. The class records were not sufficiently provided, and the ship was bought without the knowledge of its sinking. Marcus can argue that the insurance will pay for the damages although he does not give any evidence of such. Marcus professional advice is to ensure that the ship is fully insured and that the cause of the fire and the sinking is established. The buyer can demand compensation or a monetary refund from the insurance company so that Marcus will not go bankrupt. The ship owner's lifestyle is not considered in this case because his love for expensive things does not appear anywhere in the contract. The case is independent of his lifestyle and is not a breach of the sale contract. In fact, it should be argued that the buyer did not follow due procedure when buying the ship. In favor of the Marcus, he did not breach any sales terms and if the ship is insured the buyer will receive another ship replacement ‘as is' By virtue of the implied MOA policy that was not satisfied by neither the buyer nor the seller, it can be argued in a court of law that there was satisfactory breach of term by the buyer in the sale contract. The s.14 (2) of the SGA policy was violated in favor of Marcus, the ship owner. No SGA terms were implied in the contract and assuming that the ship is fully insured the buyer will get another ship at the US dollar 15 million values. The customer ignored the SGA terms and thus Marcus has no legal implications in the sale. The mistake that the buyer did was not also consistent with the SGA terms, so the legal case is in favor of Marcus in the Moskva ship agreement. Background facts Leningrad Ship In the case of the Leningrad ship, the satisfactory terms were not met under the jurisdiction of the sale agreement. Moreover, the implied terms do not justify the conditions as to whether there was a clean bill. The buyer of the ship should be keener when doing the purchase and the terms of sale were stipulated in the agreement with Marcus. The ship owner had the obligation to show the Imelda Chow the obligations under which the conditions that are specified in the free standing quote. The ship was bought at $20 million but later discovered to be worth $10 million. The vessel that Imelda Chow saw is not the one she bought. Legal Implications On October 2nd, Imelda had not taken into account the obligations of the seller under the clause 11 of NFS 1993. The buyer has no legal consequences of fraud because he sold the ship on a clean bill of sale. The inspection and obligation of the seller had no bearing. In fact, when the sale findings are evaluated, the ship is valued at 10 million US dollars. The insurance experts have deemed that the buyer received more money, and thus the claim for damages from the buyer excludes the ‘as is’ and ‘as is where is' clauses. The terms of sale were satisfactory and cannot be deemed as fraud as the buyer did not take the time to know the state of the intended ship Leningrad. Conclusion The Leningrad and Moskva ships sale transactions took place in succession that is October 1st and October 2nd. The fact that Marcus legally inherited the property has no breach of the contract. Similarly, his love for expensive cars, cigars and champagne does not give sufficient conditions for violation. (Jadew, 2013, p.56). However, Marcus should have taken into account the state of the ships before the sale to avoid disputes after the sale. His lifestyle of lavish things can lead an individual to run bankrupt, and it is advisable for Marcus to look for a good financial advisor and a lawyer to take him through the sale of the expensive ships. It is evident that Leningrad ship was insured though the experts should have advised Marcus to keep track of his ships at all times. This fact is important to safeguard the property of his father and avoids him from getting bankrupt. References Jadew, T. (2013). The Legal Implications of Purchase of Expensive Ships: Ensuring a Strategist Policy Statement. Atomist: Cambridge National University. Read More