Honey Bee (Hong Kong) Limited sued VitaSound Audio Inc. and its principals for repayment of a US$500,000 loan and personal guarantees, plus default interest.
VitaSound counterclaimed, alleging Honey Bee breached an investment agreement by failing to supply audio devices and sought equitable set-off for an alleged delivery shortfall.
The court found no enforceable oral amendment to the investment agreement, which required written modifications.
It concluded that VitaSound, not Honey Bee, breached the investment agreement by declining to accept specified PAE-300 units.
Consequently, Honey Bee did not breach its obligations by ceasing supply after VitaSound's default on the loan.
The court dismissed VitaSound's counterclaim and found that equitable set-off was not applicable due to the lack of a clear connection between the claims and VitaSound's prior default.
Judgment was issued in favour of Honey Bee for the loan principal and default interest.
