Ready and Co, a firm of accountants and auditors, were engaged to prepare the ac
ID: 349125 • Letter: R
Question
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 negligenty prepared and showed the company as financially stabe, even though the opposite was true and the company had large unpaid debts Hind showed the accounts her friend Imran. Hind bought AED1 million worth of shares and Imran bought AED 500,000 worth of shares. Within 6 mornths, Products for People plc wentinto liquidaton and both Hind and Imran losttheirinvestments. Advise () Hind and 2) Iman whether they are kely to be successful in ther daims in Whatare the 3 points to be proved in any claim based on negligence? . Whatdoes What mustbe proved in a claim for'negligent misstatement? Would Hind be successful in a claim for 'negigernt misstatement against Ready and Co? Would Imran be successful in a claim for negligent miss tatement against Ready and Co? es pure economicloss meen and when can a caim be made forit? Would Ready and Co haveany defences?Explanation / Answer
1. The points to be proved in a claim based on negligence are:
Duty- Under the circumstances the defendant owes a duty towards the plaintiff.
Breach- by acting in a certain way or failing to act in a way, breaching of the of the legal duty
Causation- the cause of the loss of the plaintiff by the defendant's action.
Damages- The plaintiff's damages are the results of the actions of the defendant.
2. Pure economic loss is when the damage is caused due to he negligent action of the party or defendant is financial without causing any injury or damage to the person or property. Claim for it can be done if the loss of the paintiff was due to the defendant's statement or information provided by him. There should be relationship involved between both the parties and loss be due to negligent misstatements.
3. To prove negligent misstatement in a claim the following have to be proven:
- the parties involved in a special relationship
- the party offering the advice should have a voluntary assumption of responsibility.
- dependancy on the advice by the receiving party
- reasonablity of the reliance.
4. Yes Hind will be successful in the claim for negligent misstatement against Ready and co. because it fulfills all the points mentioned above for the negligence statement to be proven.
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