Course Legal Aspect of Contract Please Give the Correct Answer the people are gi
ID: 427814 • Letter: C
Question
Course Legal Aspect of Contract
Please Give the Correct Answer the people are giving wrong answer
SCENARIO 4
Ready and Co, a firm of accountants and auditors, were engaged to prepare the accounts and balance sheet for Products for People plc, knowing the accounts were to be sent to Hind, a private investor, who was thinking of buying shares in Products for People plc. The accounts were negligently prepared and showed the company as financially stable, even though the opposite was true and the company had large unpaid debts. Hind showed the accounts to her friend Imran. Hind bought AED1 million worth of shares and Imran bought AED 500,000 worth of shares. Within 6 months, Products for People plc went into liquidation and both Hind and Imran lost their investments.
Advise (1) Hind, and (2) Imran whether they are likely to be successful in their claims in negligence against Ready and Co and what defences the company may have.
1.What are the 3 points to be proved in any claim based on negligence?
- Duty
- Breach
- Consequential loss
2. Would Hind be successful in a claim for ‘negligent misstatement’ against Ready and Co? Explain clear please
3. Would Imran be successful in a claim for ‘negligent misstatement’ against Ready and Co? What are the requirements for Special Relationship
4. Would Ready and Co have any defences? this is a claim in tort not in
Explanation / Answer
1. In case of claim based on negligence, following things need to be proved-
2. Hind would be successful in a claim for ‘negligent misstatement’ against Ready and Co. as he qualifies for the case of negligent misstatement. Ready and Co owed the legal duty of care to Hind and they breached the duty by negligently preparing the accounts. As a result of this, Hind lost AED 1 million by investing in Products for People plc.
Hind can prove the following-
3. Imran would not be successful in a claim for ‘negligent misstatement’ against Ready and Co, because he does not qualify for the case of negligent misstatement. Imran does not qualify for the special relationship. The requirements of special relationship are that the claimant was reasonably relying on the defendant’s statement and the defendant is completely aware about it. Since, in this case Imran was not the client of Ready and Co., therefore they do not qualify for special relationship.
4. Ready and Co might defend itself by stating that the financial reports were prepared by independent contractors. In case of independent contractors, the company has no vicarious liability.