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Smith was in the market for a new car. He found what he was looking for at John's Auto Dealership. Smith offered

to buy the car for $20,000, subject to being able to arrange a $10,000 loan at his bank. John agreed. Smith visited his bank, and discussed the matter with his financial counsellor, Susan. Susan said she would have to secure approval from regional office, but was confident that the loan would be approved within two days. Smith went back to John's and said he was getting the bank loan and would be taking the car. They shook hands. Smith agreed to return in two days with the $20,000 and John agreed to have the car ready for him when he returned. On the following day, Susan phoned Smith and told him that the loan had been approved, but for only $5,000. As a result, Smith was unable to pay the $20,000 and John sued him for breach of contract.

Smith sued Susan and the bank, saying that they were to blame for his breach of the contract to buy the car.


Does Smith have any cause of action against Susan or the bank? Explain, showing analysis of the legal principles involved.

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