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Question: question onenear my home is a small breadshop the bread...

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Question One

Near my home is a small breadshop. The bread on sale is made in a bakeroom behind the shop. As you enter the shop you can smell the aroma of baking bread. Mmm. It smells good.


The breadshop is very popular. I know this from my own experience. I go there often and I have never once found the shop free of customers. At some hours of the day there can even be a small line of customers extending out the door. All sorts line up - barefoot kids, office workers, policemen, joggers, mums carrying babies, schoolkids in uniform, etc etc.


Above the front door to the breadshop hangs a rather faded signboard that says Lee’s Breadshop. People in my neighbourhood refer to the breadshop as ‘Lee’s’ or as ‘Lee’s Breadshop’. They say things like: ‘The prices are very good at Lee’s Breadshop.’ And ‘Lee’s bread is very tasty.’


My immediate neighbour is a gentleman named Russel Crowe who everybody knows as ‘Crowy’. Crowy was born in the very house that he still lives in. On account of his age and prodigious memory, Crowy is rather like the neighbourhood historian. He tells me that when he was a child a Mr Lee arrived and built the shop and bakeroom at the back and that Mr Lee together with his wife and children worked in the bakeroom and shop. A hardworking family, says Crowy, with obvious admiration.


Crowy, you will recall, is now very old. Mr and Mrs Lee are long dead. The Lee children grew up, went to University and became doctors and lawyers and accountants. Like Crowy they too are now old. Haven’t had any flour on their hands for thirty years, says old Crowy.


Crowy tells me that after Mr Lee died, the breadshop business was sold. In fact the business has ‘changed hands’ several times in the last thirty years. The current owner is a European family called Smith. I was sceptical when Crowy told me this. ‘Owned by the Smith family? Are you sure?’ I quizzed Crowy. ‘How come the lady who serves me in the breadshop is Chinese?’  ‘Just a worker.’ said Crowy. ‘I guarantee you it’s the Smith family what owns the business now.’ I’ve never known Crowy to get things wrong. So I guess he’s right. Lee’s Breadshop is today owned by the Smith family.



Time to get technical. Let’s presume Crowy is a reliable source of information about the neighbourhood and the history of the Lee’s Breadshop business. While Crowy is a reliable source of information we need to recognise that he speaks as everyman rather than in technical legal terms. Your job is to adopt a legal vantage point. Adopting a technical legal vantage point answer the following questions.


(i) Undoubtedly there is a business. And undoubtedly over the years the business has had a number of owners. How has the business been owned? It could be in different ways at different times. In legal terms there are three basic legal vehicles for owning and carrying on a business. Name the three alternatives and briefly describe each.


(ii) Crowy said: ‘I guarantee you it’s the Smith family what owns the business now.’ From a strict legal vantage point this is unlikely to be correct. The Smith family is composed of Mr and Mrs Smith and 3 progeny called A, B and C. A is an adult, B is a teenager and C is only 12 years old. What is the one circumstance (one only) in which it would be true that the Smith family owns the business?


(iii) Suppose we are not content with Crowy’s statement that the business is currently owned by the Smith family. Suppose we want to know who exactly (that is exactly legally) owns the business at present. ‘Lee’s Breadshop’ is obviously a business name. How, starting with this business name, can we discover the exact legal truth? In answering this question you should refer to any relevant statutory provisions.


(iv) Suppose that the founder and initial owner of the breadshop business was a company called Lee Co Ltd, which company had two shareholders being Mr Lee and Mrs Lee. Crowy said that after Mr Lee died the breadshop business was sold. It could be that this statement is the technical legal truth. Presuming that to be the case, who was the vendor?


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