ASSIGNMENT 2 - PROBLEM-BASED QUESTION.docx - Kuan-Ying Su...

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Kuan-Ying Su LAW514 Commercial Law S327723 ASSIGNMENT 2 - PROBLEM-BASED QUESTION A Introduction When the defendant is causing financial harm carelessly to the plaintiff, this is known as pure economic loss. There are three situations that the plaintiff will be able to regain compensation due to the defendant’s carelessness: 1. A person or property of a third party is suffering from financial harm due to the defendant’s carelessness. 2. The plaintiff is suffering from financial harm due to the defendant provide a defective service or product. 3. The defendant provides negligent advice cause the plaintiff to suffer from financial harm. 1 B Issue A Issue: The first issue to be considered is whether Hetty liable in a negligent misstatement to Jan? Rule Careless advice leads to economic loss is called negligent misstatement. When the defendant gives advice to the plaintiff, he or she will owe a duty of care to the plaintiff if below three elements met: Business-related advice or serious nature The defendant should be aware that the plaintiff intends to depend on the proposal. Under reasonable circumstances, the plaintiff relies on the defendant’s advice. 2 1 James Nickolas, Business Law (John Wiley, 4thed, 2017) 244 2 James Nickolas, Business Law (John Wiley, 4thed, 2017) 245
Kuan-Ying Su LAW514 Commercial Law S327723 Application Hetty, an accountant, provided an audit report which the accounts disclosed an accurate and fair view of Impish Ltd’s book’s financial position, while they did not. Hetty knew that under this circumstance, Jan would rely on the view to decide whether she will invest the company or not. Hetty provided an audit report which disclosed the company’s financial position. (business-related) Hetty knew that Jan might rely on this report to decide the investment. In this situation, Jan relied on Hetty’s audit report was reasonable. The issue could be identified as negligence misstatement because it met the above conditions. The case of Hedley Byrne & Co Ltd v Heller and Partners Ltd [1964] AC 465 demonstrated that Hedley Byrne & Co Ltd (HB) was hired by Easipower Ltd. to carry out advertising orders. HB’s banker wrote a letter to contacted Easipower Ltd’s banker, Heller and Partners Ltd(H&P), to inquire about its credit status. The bank responded that Easipower Ltd was a respectably constitute company, while it did not.

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