Coleman Accountants were requested to prepare annual accounts for Barkley Plc. The completed accounts showed a profit of £1,800,000 when they should, in fact, have shown a loss of £80,000. The accounts were sent to all shareholders ahead of the Annual General Meeting. Ronald owns 200 ordinary shares in Barkley Plc and, after reading the accounts, he purchased an additional 300 shares.
Following this purchase, it transpired that the accounts had been prepared negligently by Coleman Accountants, and the share price fell significantly. Ronald then sued Coleman Accountants for negligent misstatement and the losses he suffered as a result.
Identify the legal position in respect of the potential liability of the firm, Coleman Accountants to Ronald, using legal sources and case law to support your answer.
Tom is approaching retirement age, and has decided to sell his high street accountancy firm, which he has built up to be relatively successful. He is approached by Gareth, who is interested in buying the firm.
Gareth asks Tom why the firm has been so successful. Tom tells him that:-
a) There are no other accountancy firms within 20 miles.
b) The annual profit is around £1.2 million
c) The business will make you a fortune
Gareth asks his accountant, Carrie, to confirm if Tom’s stated level of profits are accurate. Carrie confirms Tom’s statement – however the true level of profit is £350,000.
Before Gareth has decided whether or not to purchase the firm, Tom discovers that a multinational accountant is due to open an office about 5 miles from his firm. Tom does not disclose the information to Gareth.
Gareth goes ahead with his purchase of the firm, and subsequently discovers the true level of profit, and the opening of another accountant in the area.
Identify whether there has been any misrepresentation by Tom and Carrie in the above scenario and the remedies that are available for misrepresentation, using case law to support your answer.
Charles and his friend Fiona are having dinner in a restaurant. They are discussing cars, as Fiona has recently passed her driving test. Fiona does not know much about cars, and asks Charles to find a decent car for her, as a favour. Charles finds a 3-year-old Volkswagen Polo, and recommends it as a decent purchase to Fiona. A week after Fiona purchased the car, it failed to start. A mechanic checks the car over, and informs Fiona that the car has a number of mechanical defects, and that is had been repaired badly after a previous accident.
Advise Fiona, who wishes to know if she has any recourse in law against Charles, who she believes acted as her agent in the purchase of the car. Use legal sources and case law to support your answer.